How the Fed Helped Create the China Bubble — and Bust

Source: Cobden Centre
by Brendan Brown

“The salvo from Washington as it unleashes the Green War with China leaves no doubt about the perilous state of Sino-US relations, and, incidentally, about Bidenomics. Yet, the remnant of a strong monetary link between the two countries brakes the journey into an intensified cold war between the two countries. Monetary realities mean the brewing cold war will likely occur in a more winding fashion than the headlines suggest. Take as a key illustration the near 15-percent fall in the yuan’s real effective exchange rate since China’s real estate bubble finally burst in 2021-2. This is reassuring in one important sense. It tells us that the Chinese currency is playing to the same music of previous great crashes in once ‘star bubble economies.'” (05/23/24)