Friday, June 11, 2010

China's Inflation Problem and the Crash Ahead

Chinese inflation has exceeded the 3 per cent target set by the government for the year.

Consumer price inflation rose to 3.1 per cent in May from 2.8 per cent the month before, while manufacturing inflation was also higher at 7.1 per cent, up from 6.8 per cent.

These numbers should not come as a surprise, given the amount of new yuan the Chinese central bank has printed to prop up the dollar. These inflation numbers are likely to cause China's central bank to slow money printing, which means a crash of China's stock market and economy--and even less liquidity for the global economy.

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