As important though, in my opinion, is the fact that the US Fed interest rate will also be crushing the economies of very large numbers of developing counties. They are forced to borrow in dollars – wholly unfairly
Who is holding a gun to their heads forcing them?
That no one is willing to lend to those who allow the central bank to be run by the politicians is not exactly forcing now, is it?
There’s plenty of examples of developed countries being forced to borrow in dollars : Britain during the Great War, Germany in the 1920s… Was it unfair then ?
Anyway rather a bad debt owed to the Yanks than the Chinese, I suspect.
What’s a developing county? Rutland?
“developed countries being forced to borrow in dollars”: that’s simple misuse of “forced”. Nobody forced them to borrow anything. It was a decision by government reached by weighing up pros and cons. Using “forced” of events when no force or coercion is applied is just inaccurate, whiney, excuse-making journalism (and it seems to appear in the papers every day).
Didn’t Iraq decide to stop using the dollar shortly before the US fabricated a reason to bomb the utter fuck out of it?
I’m not sure that all the signs point to a fall in inflation (although some indicators do). The Great Reset agenda continues alongside Net Zero/ ESG and all the other cost creators, and there’s no indication the damage to food processing plants in the US has been fixed, or the cost of agricultural commodities (driven globally) is necessarily coming down. Furthermore, harvests have been hit by adverse weather and Avian flu has hit poultry sectors in Europe.
What I find interesting is the guy seems utterly incapable of coping with multiple causation, or indeed anything beyond Blytonesque simplicity. In fairness he seems to ignore the Ukraine War completely but otherwise heals behind the four key drivers of inflation.
– Lockdowns and their aftermath
– Net Zero
– Monetization of earlier QE and subsequent QT
– Unlimited immigration and the demand for resources without productivity from c. 7 million illegals.
I’d seriously recommend anyone avoid going to any higher education institution in the UK if this is the calibre of person that can get employment.
Thing is, go to two doctors, one of whom tells you your lifestyle has led to your current predicament and the treatment is long and painful and the other who tells you it’s all someone else’s fault and this donut will cure you and the second doctor is always going to find an audience.
It might be an audience of soon to be deceased patients but by then it’s too late.
Spud is that second doctor.
Given Murphy’s bedrock belief in QE being the miraculous cure for everything without consequences of inflation or hitting the exchange rate, why does he then believe any country has to borrow. Can’t they just use QE to create the money and use it to buy dollars should they need them. What could possibly go wrong?
Anyway rather a bad debt owed to the Yanks than the Chinese, I suspect.
If you’re physically close to China, yes. An African or South American nation is probably better off with Chinese debt than American. The Yanks will expect to be paid and have the reach to ensure they are. The Chinese don’t have the economic or military clout to force collection (and will be busy trying to avoid collapse), and the Yanks might actually encourage you not to repay the Yuan.
Thanks for the mines and ports, suckers.
PJF
I don’t know on the military assessment of China! The PLA is big enough to send in a few gunboats and troops to secure assets if required. I would agree the Economy looks like a house of cards but that hasn’t stopped Russia trying it on…
@Snoop
Didn’t Iraq decide to stop using the dollar shortly before the US fabricated a reason to bomb the utter fuck out of it?
Wasn’t the fabrication the work of that well-known alcoholic depressive Alastair Campbell? Although I’d certainly accept that he was operating at the behest of the US.
Can’t help feeling that defaulting on Chinese loans will result in a lot of “accidents” happening to infrastructure and people.
Don’t the CCP now own Zambia ?
I’d be much more concerned about what the Chinese would do if I was a government official defaulting than if it was a US default and not necessarily at the scale of gunboats and troops
Also the Chinese seem to be more inclined ship in enough people to at least go down the possession is 9/10ths route rather than rely on paying off locals for security etc.
Otto,
Yes, and Sri Lanka thanks to the green fuckwits who persuaded them to go organic overnight.
– The PLA is big enough to send in a few gunboats and troops to secure assets if required.
The PLA still has no substantial transoceanic force projection capability. It’s naval and air forces are almost totally focussed on the near-China seas. They could probably cobble together a mission to harass a single* coastal African nation, but sustaining a sufficient attacking / occupying land force would be a struggle without compromising their local interests.
* It’s unlikely a cynical default would be a go-it-alone affair, and allied African armies would be a problem for an extended force. Any help from the West, or even India, and the Chinese wouldn’t have a hope.
Can’t help feeling that defaulting on Chinese loans will result in a lot of “accidents” happening to infrastructure and people.
If it’s just taking the piss and falling behind on payments, sure. But an outright “fuck off, we’re not paying” would come in tandem with an outright “fuck off”. Once you’ve booted out all the Chinese there’s not much they can do. It’s not as if the Africans don’t have a bit of experience at this lark.
《Can’t they just use QE to create the money and use it to buy dollars should they need them.》
Isn’t this happening? Only arbitrary, capricious sanctions prevent Venezuela from getting funding, right?
Sure rsm. You print all the money you like and use it to buy dollars!!!