The Domestic Value of the Renembi is Strengthening: China is the first G20 economy to report a year-on-year decline in consumer prices – August 9, 2023,
While the Yuan on the forex value will find its place, the domestic value of the Renembi is strengthening, and that’s quite an interesting turn of events. Because of the rule by fiat money monetary system in which nations jockey for their place in the world for reserved currency status, the Chinese similar to the Japanese, took the MANUFACTURING approach.
Marxism is centered around owning the means of production., which makes a lot of sense because if you can MANUFACTURE prosperity, money, or whatever the common medium of exchange is will be THROWN at you. Even if you believe in a Gold standard, the gold will go to the people who are the most efficient at mining, manufacturing, and bringing it to market.
So when I read that the Chinese economy is DEFLATING and consumer prices are coming DOWN, that indicates that other nations’ PURCHASING power is DEFLATING.
If China has room to lower consumer prices without bankruptcies running rampant, it’s an indicator that the Chinese consumer is a good shape. People tend to forget that the savings rate in Japan is still relatively high. Meaning that Japanese citizens still have money in case their economy really starts to suffer.
In China, a lot of people are invested in real estate; however, in many ways, the developers are on the hook for that real estate because if the Chinese buyer defaults, the developer is left with the property and no payments.
A reminder to the reader that a lot of Chinese real estate that people are on the hook for hasn’t been built yet, so this thing goes both ways; in actuality, if the Chinese real estate market were to crash, minus the temporary downturn, it would free up a lot of capital for an already financially disciplined Chinese population.
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Again a lot of Chinese have manufacturing jobs to go to in the event the economy nosedives; on the flip side, most Western countries are for the most part service sector economies, with little ability to manufacture anything.
In fact, in countries like Canada and the United States, and many E.U countries, there’s a WAR ON ENERGY, which means that these nations would have to gut their welfare state in order to manufacture anything.
Also, the fact that there have been virtually no protests regarding manufacturing jobs leaving Western nations, is a sign that Western nations would rather those manufacturing jobs remain overseas.
This again equates to China’s position not being as bad as people would like to imagine. You want a hard-working population that can survive WITHOUT government handouts, although China is run by the Chinese Communist Party, the people aren’t dependent on government handouts to survive, in China, you’d better find a job or you’re out on the street.
Also if you’re elderly in China, they don’t have a variety or a plethora of pension systems sending them free money while their government falls deeper and deeper into debt.
As I like to remind readers, the Western world in many ways has reached a period in which it’s 100% dependent on the strength of their FIAT currencies, whereas in countries like China and Japan, it almost appears like their respective governments are indeed treating fiat money with prudence.
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Interesting times ahead!