Comment by refurb
1 month ago
There is no free lunch. Debt in China is still owed to someone. Printing money creates inflation. Oversupply leads to deflation.
It’s why China’s real estate company debt is dragging down the economy as a whole. It’s all connected.
China very much is held to the same rules as the US, especially as it engages with the global financial system.
Which is why they are in so much trouble. The economy is anemic. The last stimulus package barely made a difference. Debt overhang remains.
There actually literally is a free lunch. Debt owed to the government by itself isn’t real. Assets and infrastructure are real.
It doesn’t matter how much you think China is in trouble financially, at the end of the day they still manufacture a third of everything in the world.
> There actually literally is a free lunch. Debt owed to the government by itself isn’t real.
False.
It may not be the same as debt owed to other parties, but not paying it still has consequences for things like money supply.
Otherwise, why would the government not just lend endless amounts of money? Even the Chinese government knows they can't do that.
> It doesn’t matter how much you think China is in trouble financially, at the end of the day they still manufacture a third of everything in the world.
Their output doesn't really matter when it comes to their financial situation. You can produce a lot and still be in trouble. And it's not me that is calling out China's problems, China is talking about it as well.
I never said anything about lending infinite money, don’t straw man me.
The constraint is on real resources, which China has plenty of, regardless of how much debt they have.
The financial situation is an accounting detail. China could decide to write off all debt it owes to itself tomorrow, and literally nothing would change.
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