http://albertpeia.com/chinaswarningbell.htm
‘Let’s wind the clock back to
2008.
The world was thought to be
ending. Lehman went bust. Markets were plunging. Everyone was scared that
growth was over. It was as though the global economy was grinding to a halt.
But then China’s stock market
bottomed. The Chinese Government announced a massive stimulus plan to turn its
economy around. And sure enough the Chinese economy took off again.
A few months later, the US
markets bottomed courtesy of extraordinary stimulus from the US Federal
Reserve. Three months after that, the US economy was showing what everyone
claimed were “green shoots.”
And the world began to gradually
shift towards growth and increased confidence.
Why do I bring all of this up?
Because it was China’s stimulus and China’s economy that supposedly lead the
world back towards growth again. China is the proverbial canary in the
coalmine, the economy that most quickly reveals what’s coming and where we’re
all heading…
Well, China’s heading for
inflation.
BIG INFLATION.
China should be on “high alert” over
inflation
after February’s figures exceeded forecasts, central bank Governor Zhou
Xiaochuan said, signaling a heightened focus on controlling prices.
Monetary policy is “no
longer relaxed” and is “relatively neutral” as demonstrated by a 13 percent
target for money-supply growth that’s tighter than expansion in the last two
years, Zhou, head of the People’s Bank of China, said at a press conference
today during the annual gathering of China’s National People’s Congress…
“The central bank has always attached great
importance to consumer prices,” Zhou said. “Therefore we will use monetary
policy and other measures to hopefully stabilize prices and inflation
expectations.”
China’s new leaders
including Li Keqiang, set to become premier this week, inherit the task of
sustaining a recovery from the slowest growth in 13 years while reining in
asset prices and credit. February inflation, distorted by the weeklong Lunar
New Year holiday,
accelerated to a 10-month-high of 3.2 percent.
Bear in mind, the above story is
greatly downplaying the REAL increase in inflation in China. A recent study
from shows that prices in some Chinese cities are in fact higher than in NEW
YORK. And China’s per capita is income is less than 25% of the US’s!
A South China Morning Post
survey of some commonly bought grocery items found that a 500 gram loaf of bread that sells for
HK$8.60 in Hong Kong and the equivalent of HK$9.93 in London, cost the
equivalent of HK$13.52 in Beijing.
The latest annual cost of
living survey by the compensation-consulting firm Mercer found Beijing and Shanghai to be
pricier than New York and London. Shanghai was ranked 16th followed by Beijing
at 17th, ahead of London (25th) and New York (32nd).
http://www.scmp.com/news/china/article/1091651/cost-living-china
This is a MAJOR warning sign to
investors worldwide. Indeed, inflation is so out of control in China, that the
country suffered 71 strikes in January 2013 alone.
The cause of these strikes?
Workers were demanding higher
wages because prices had risen to the point that their old paychecks weren’t
cutting it anymore.
China has sounded a warning
bell, inflation is coming. And it’s going to be spreading throughout the globe
in the coming months.
History has shown us countless
times that you cannot print money without prices soaring. There is not one
single instance in which currency devaluation has not done this. And the US
Federal Reserve is now printing $84 billion every single month.
I’m sure you’ve noticed prices
have begun rising already. This is only going to be getting worse going
forward. Which is why now is the time to be preparing ourselves and our
portfolios for this. Inflation can take its time to arrive. But once it does…
things move very very quickly.
If you’re concerned about
inflation… and want to learn more about simple bit highly effective ways you
can shield yourself from it…’
Best Regards,
Graham Summers