Friday, February 18, 2011

China Raises Bank Reserves, Again

China central bank, the Peoples Bank of China, has again raised required reserves for banks. The reserve requirement now stands at a record 19.5 percent.

The is the fifth increase since October, all in increments of 50 basis points. It does not stop Chinese central bank money printing, but slows it down. The likely outcome: Stagflation in China.


  1. Who says stagflation rules out a crash?

  2. "Who says stagflation rules out a crash?"

    The "stag", as in STAGNATION, part of stagflation?

  3. @Capitain Freedom

    The "stag" in stagflation refers more to the economy over all than the stock market. During the stagflation of the late 70's early 80's there were a number of stock market crashes.

    Take a look at 1978 and 1980.

    Further, Keynesians think of an inflationary period as a boom period, so stagflation refers to an inflationary period and a period when the economy is not doing well, including a poor stock market.

  4. How will this affect the housing market?

    Many people think that the Chinese housing market is going to crash, what with all the empty cities, but won't there be Chinese people that buy housing to protect themselves against inflation? How will this pan out?