humanspirit wrote:
People's Bank of China injects capital into economy to ease credit crunch fear
LINK
So surely they are just panicking about the markets and buying gold just like some people in the west did?
The currency system is similar in China, if not identical, to the West.
Lorraine Tan, director of equity research at S&P Capital IQ, told CNCBC that the PBoC may need to take more action.
"I think it's just a momentary thing … it's a seasonal issue, a rush for cash. Definitely the PBoC needs to pump in more money, which it has been doing, but a little bit more is probably necessary."
Beijing pumped trillions of yuan into the economy during the global meltdown of 2008-09 and succeeded in ensuring that recession was short-lived. But officials have grown increasingly concerned that the stimulus encouraged excessive borrowing by commercial property companies and by local government. The PBoC has been pushing up interest rates in recent months to rein in credit growth without causing a "hard landing".
Investors fear the combination of Fed tapering – the gradual winding down of America's quantitative easing programme – and tighter China interest rates could weigh on emerging market currencies and assets, as it did back in June.
Doesn't this sound familiar? When you read analysis of this sort of stuff, there is always some supposed economic commentator making it sound perfectly rational. Of course, QE is not ‘winding down’ , they’ve just had to do something to try to reassure the market that it could end at some point in the future. Which it won’t. There’s no way that’s going to happen. Also, sooner or later interest rates will be raised, at which point there will be economic carnage. Again. Even the BBC is reporting this:
www.bbc.co.uk/news/business-25541733
But somehow when debt affects individuals it’s very dangerous, but when governments and central banks create debt, it’s a good thing! It creates liquidity! People genuinely believe this all over the world.
China’s accumulation of gold could be due to many things, you could attribute it to several possible strategies. But it’s certain that if you keep printing money and printing money and printing money, and at the end of it you’re further in debt than when you started, you’re in big trouble. It could be that China is simply aware of this and that’s the reason they’re accumulating gold. It’s really hard to say, but it won’t end happily.