RE: Countries Vulnerable to Economic Devastation Soon
China’s rebalancing will drive the Bitcoin price sky high
I wrote in this blog:
Note that although China and Japan have very high debt-to-GDP ratios, their debt is all internally financed with their domestic currency, so they are more insulated against a rising U.S. dollar even when they experience their coming debt reset.
Anne Stevenson-Yang wrote:
Until now, China has managed to keep its huge raft of nonperforming debt afloat thanks to capital inflows, as successive waves of quantitative easing pushed dollars into the world. A tighter dollar would seem to make the bursting of China’s credit bubble an inevitability. When that happens, the renminbi will have to depreciate sharply. This will have a deflationary impact on the world. It will also lead to a decline in China’s share of global GDP, dramatically reduce the nation’s demand for commodities, and diminish its role on the international political stage […] No one will benefit when China shrinks and turns inward. Trump should be careful what he wishes for.
Although it is true that China’s share of GDP will decline when it undergoes its coming debt reset (as was the case for Japan and the USSR according to the actual data) because its GDP is a farce, the fact is that China is not a driver of global GDP demand because it’s running a surplus of savings because its fake GDP suppresses its consumer sector whilst subsidizing the export and inappropriate infrastructure sector:
Are NEW Chinese buildings really FALLING DOWN?
So when China rebalances it will be a correction to China’s current account because of fake accounting (meaning China’s share of international wealth will decline by some means, but probably not via renminbi depreciation) but the consumer share of China’s economy can begin to increase so China can actually start driving global demand and rise to #1 economic power in the world. So although the debt reset of China could wreck economic recession on commodity exporting countries (such as Australia!), it will drive demand for economic production such as factories which relocate from China to lower wage nations because of the resultant rise in relative wages within China.
So it is likely that Chinese demand for Bitcoin would continue to increase as the threat to China’s current account rebalancing becomes more imminent as it is the way for capital to escape the contraction in wealth valuation (i.e. the adjustment to China’s capital account as the current account surplus shrinks) without devaluing the renminbi relative to other major currencies such as the U.S. dollar. The way for China to prevent those renminbi which are used to buy Bitcoin for capital flight from being converted to foreign currencies (even on black markets) is allow the public to invest in Bitcoin. Thus I predict China’s ban on Bitcoin will be rescinded, because the leadership in China would much rather protect the renminbi exchange rate than be dogmatic about preventing the rise of a tertiary asset which doesn’t even really function as a currency well. Bitcoin is a reserve currency asset and as China wakes up this reality, they would be insane to not allow their citizens to invest in Bitcoin (especially as real estate investments in China are cratering in value, which I surmise is probably the main reason China resisted and cracked down on the investment speculation in Bitcoin because it threatened to pop the real estate bubble). IOW, China’s leadership is eventually going to have forsake some control. They can’t keep the Chinese people suppressed and held inside a fake GDP investment bubble forever. The day of reckoning is approaching and this will be good for the Chinese people.
But the other huge problem in the global economy is the massive indebtedness worldwide and the short dollar vortex which I explained in this blog. These factors are going cause global investment and demand to contract significantly. Yet coming out of this will be Asia driving economic growth because Asia has the best fundamentals overall including low tax rates, low overall indebtedness, youthful demographics, strong family values, and strict crime control without the significant problems with welfare seeking deleterious migration in the West.
Bitcoin rises against all nation-state currencies, thus allowing its citizens to purchase BTC and have a liquid market in BTC, means China’s citizens can transfer (capital flight to exit the depreciating economy) the capital account imbalance (which you said must adjust in conjunction with the current account rebalancing) into an appreciating asset whilst not interfering and in fact supporting the ability of the PBoC to defend the renminbi relative to all the depreciating nation-state currencies. Of course, this depends on the authorities forsaking the real estate bubble
for the Bitcoin speculative asset (it is not a bubble, c.f. copy of email below), because it will make sense to sell real estate and buy Bitcoin for both reasons of the apparent currently popping bubble of real estate (in some regions) and also for a more fundamental reason:
https://steemit.com/cryptocurrency/@anonymint/bitcoin-rises-because-land-is-becoming-worthless
They can then reinvest those Bitcoin proceeds into the growing consumer sector as a transitive phase over the next decade or so.
What the Chinese authorities presumably do not want is the most wealthy buying Bitcoin on the black market with renminbi then the only buyers being foreigners who want to dump that renminbi for foreign currencies. Much better for China to have a liquid market for Bitcoin where the entire population can speculate so that the renminbi just recycles within the Bitcoin markets and doesn't get traded for foreign currencies.
In short, my position is China needs an avenue for the capital account to adjust without driving demand for foreign currencies in exchange for renminbi. Bitcoin may provide that option.
---------------------------- Original Message ----------------------------
Subject: Who created and why they created Bitcoin
From: "Shelby Moore"
Date: Thu, July 19, 2018 4:23 pm
To: Paul Graham [email protected]
Paul Graham,
I just became aware you asked for the plausible motivation for some powerful entity to create Bitcoin:
https://news.ycombinator.com/item?id=5547423
Here is the most plausible answer:
Further supported here:
Other relevant information:
https://steemit.com/money/@anonymint/get-ready-for-a-world-currency
https://steemit.com/cryptocurrency/@anonymint/shocking-crisis-coming-to-cryptocurrency-in-sept
https://steemit.com/bitcoin/@anonymint/the-real-bitcoin-which-bitcoin-fork-will-win
The first link I provided will give you the elevator summary, but you will need to really dig deep into my linked discussions to understand all the depth of my evidence and hypothesis.
I wrote in my prior post:
William Pesek wrote:
Is incorrect because devaluation is countervailing to China’s necessary re-balancing to more consumer share of the economy. That would exacerbate China’s structural weaknesses.
That is China’s loss not ours. The short dollar vortex will be sending all the money in U.S. stock markets. U.S. investors don’t need to be invested in Chinese startups at this juncture.
Then Trump can ramp up more tariffs and squeeze China into a much more severe re-balancing that could lead to political unrest in China, as the consumer share would regress.
Trump doesn’t fucking care. The U.S. economy doesn’t hinge on Facebook, but rather on small business growth. We’ll be disintermediating Fascist book anyway.
U.S. Treasuries and stock market are the most liquid markets. Where else can China park reserves?
I wrote about the coming “Bitcoin Standard”: