Saturday, June 16, 2012

Real Numbers from China? (Automatic Earth)

Goodness! Gracious! Great Wall's on Fire!

The Great Wall of China (built in Ming Dynasty) winds its way through deserts, basins, plains and mountains of North China extending over 6,350 km (3,947 miles)
Please allow me to start off with a few explanatory bits. At The Automatic Earth, we have always defined inflation in a different manner from most other sources. That is to say, we define inflation as an increase in money and credit supply (relative to available goods and services), combined with velocity of money, not as simply an increase in - some - prices.
We see this this as significant because if inflation is defined as any price increase, we lose sight of why prices increase, a crucial "detail". Similarly, we don't attach much importance to CPI numbers, since they lack the same attention to detail we find with the definition of "inflation" as it is generally reported and used.
That said, I think it's high time to look at some recent Chinese data and try to draw what - initial- conclusions we can from them. I also think we can peer through them towards a picture of the future that few have acknowledged to date, and perhaps even fewer wish to. If what I'm about to say is even halfway true, the economies of countries like Australia andNew Zealand, which we visited recently, as well as many others, are in for a brutal shock.

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