Are Chinese Government Regulators ruining the Chinese economy? First Cryptos, now Riding Sharing, China cracks down on ride-hailing app Didi – July 6, 2021,
Because basically, every country on this planet has embraced debt as its primary means to grow the economy, the enemy of servicing debt is creating excessive and sometimes unnecessary barriers for the private sector. Some suspect the Chinese Communist Party(CCP) is gearing up for war, which would explain the reason why this sudden crackdown on parts of its tech sector, but maybe China is cracking down on its tech sector because there are talks in the West of over-regulating social media and the CCP is trying to show that they’re leading the way.
In many countries including Canada, the labour unions many of whom are losing members and losing influence in the private sector have been doing everything in their powers to limit the options of private contractors, trying to get the government to make gig workers become employees.
Now, obviously one of the special interest groups pushing for this are the Taxi Cab Lobbyists, even though Uber as an example hasn’t become profitable, the Taxi Cab lobby which is reliant on the government to hold onto its monopoly, knows that technology will be bad for their business model long term and they as well as other labour unions, some of which are public sector unions are working to kill the Gig economy and they’re trying to do this on the FEDERAL level.
Well, in China the CCP controls everything, and because Communism and National Socialism are actually giant Labor unions any entity that is deemed a threat can easily be destroyed overnight. Now, what China did doesn’t seem like a big deal, but it’s huge because as I like to point out, I don’t price anything in Fiat dollars, because idiots who price their value in fiat dollars have a difficult time understanding the cost of doing business.
You see there comes a time in which the private sector has to raise prices. In a free-market economy, there exists no minimum wage, no price controls, no rent controls and the end result of this relationship is DEFLATION, the stock market as an example becomes riskier because just like watching your favorite sports team only a handful of teams/franchises make the playoffs and only 1 team will be crowned champion.
Now, this doesn’t mean that the other sports teams are profitable, it just means that there is no guarantee of INFLATION. In an inflationary global economy cash flow no longer matters, because debt is so cheap, and the debasement of fiat cash is guaranteed, everyone who goes into debt or who has access to debt and can at the very least service that debt feels like a genius.
But you see this ends once the private sector is FORCED to raise prices, because once prices all across the board are forced up, it costs more fiat dollars to buy fewer goods and services, and what happens here is there are fewer incentives to work. Now in China, their Welfare State is nothing like the Western world, however, China’s main customer is the Western World and the Western World is headed for economic collapse.
You might say to yourself, that’s not a big deal, China has all the manufacturing, but this a big problem, Because China has a $16 trillion dollar DEBT problem and now it’s kicking out important sectors of its economy. As everyone knows, Chinese financials are not to be trusted, I don’t invest in China because they’re not transparent, we all know China is bankrupt, but China does have Special drawing rights (SDRs), the IMF decided to add the Renminbi (Chinese yuan) to the basket of SDRs on October 1st, 2016 and what’s this has done as served as a promotional tool for the Chinese Communist Party.
Because you have to remember that the CCP is the only communist country given Special drawing rights, which is why people like me reject globalism. So if you’re wondering why Western countries are being bombarded with communist propaganda, you have to remember that China has Special drawing rights (SDRs) meaning they can print money at will and not even report on it.
China’s $16 Trillion Problem Collides With ‘Taper Tantrum’ | forbes.com
This is one of the reasons most of us can see the China bubble bursting, but when will it happen? I don’t know, it may never happen, what would trigger it is if PRIVATE debt servicing becomes a huge problem in China. Debt servicing is already a huge problem in most Western countries and once the inflation genie is out of the bottle, there’s only one way to put it back in (Austerity Measures).
A shrinking government is devastating to a Communist regime and or National Socialist regime. Most people will buy into communism primarily because the economy is booming, if the economy stops booming, especially in a communist country, things can get ugly really quick. What people tend to forget is once a regulation is brought forth or something is nationalized, it takes a long time for the private sector to get comfortable returning to a country.
As an example in Canada, a lot of American companies simply refuse to sell certain items to Canadians, because the Canadian government has a lot of tariffs on U.S-derived goods and services. So as an example, most knife or gun companies don’t even bother to sell to Canadians, even though this makes a lot of Canadians happy, it equates to massive losses for the Canadian government, which shrinks our economy and forces Canada to often debase its own currency.
Regulations and Nationalization are something for uber-rich countries with a lot of GOLD or high-demand products or services. Luckily for governments worldwide, people are still accepting fiat dollars, but I remind the reader that socialism doesn’t work when money is backed by something tangible. What makes money return to being backed by something tangible are either wars or when there are unfixable cash flow distortions in which the private sector is FORCED to raise prices on consumers every time the government adds a new regulation.
This is what happened in Venezuela, long before the recent Venezuelan currency crisis, Hugo Chávez began nationalizing private companies and changing the Venezuelan constitution. For the Venezuelan private sector things became unbearable, so many businesses left permanently, but… during that time, the Venezuelan bolívar on the Forex markets was holding its own.
Then there was a downturn in the price of oil and because Venezuelans had become dependent on imports, their currency bought less, which forced vendors to spend more to import goods, now, because Hugo Chávez had already chased away private businesses, there was nothing more to nationalize, so to meet the demands of people willing to import to Venezuela, the Venezuelan government was forced debase their currency.
Now, because we in the West and China have SDR’s our problems are a bit different, what we have is a private sector debt servicing problem, that a lot of the commercial banks got ahead of a long time ago. Because debt is so cheap, commercial banks are buying up what they believe will be cash flow-producing assets in the future.
This is bad for governments because its pool of people or entities to blame when the crash occurs is getting smaller. Plus even if the government finds someone to blame, it will all be theatre, for the people dependent on government handouts for their livelihoods, but during times like these, no one can really know what’s going to happen, you can only be mentally prepared. For myself, based on what I’m seeing coming out of China, it appears the meltdown has already begun, but don’t for a second that the CCP can’t prolong the inevitable.
Interesting times ahead
