Posted by WARREN MOSLER on May 26th, 2011
Very good, tends to support some of my ongoing themes:
China will produce more of its own resources.
Higher rates don’t bring down demand, and probably increase it.
It’s the fiscal tightening, directly or indirectly, proactive or via auto stabilizers, that ultimately cause the tree to fall. (US budget went into small surplus in 1979, for example)
The inflation problem is severe enough for them to be using export unfriendly currency appreciation to fight it.
Hopefully it doesn’t all come apart in Q2!