China's "Planned Capitalism" Kills Wealth | Sandy Ikeda
A story of slow strangulation.
More after the page break.
"Sometimes, prosperity is an illusion. The massive building boom in the People’s Republic of China is creating outer signs of affluence, but there isn’t enough demand to put residents in the new homes.
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The millions of people employed in China’s construction boom are being paid with money that the government has created out of thin air. Yes, they will spend their new incomes and add to current aggregate demand. But if the construction has not been financed through real saving, then down the road, the cost of those resources will inevitably overwhelm people’s willingness to pay for them. If you build it, they may not come. So unless China can somehow find hundreds of millions of willing and able buyers, we may see an economic collapse beside which the Great Recession would pale in comparison."
Just so. This is just the tip of the China iceberg.