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China’s Cement Shoes: The Crash Is Inevitable

Written by Gary North on May 15, 2014

The Chinese government is run by a bunch of old Communists who grew up under Mao. They believe in central planning.

They sent their bright young men to study economics in America’s graduate schools. These young men came back Keynesians.

The Chinese economy today is a mad mix of free market entrepreneurship, central bank counterfeiting, Keynesian mercantilism, and Communist central planning.

It is an accident waiting to happen.

The oligarchs have indebted the country to the tune of $25 trillion, up from $1 trillion in 2000.

They have built empty cities.

Here is the capper. Between 2011 and 2012, the planners built so many infrastructure projects that the nation consumed more cement than the United States used in the entire 20th century.

This cement is going to serve as shoes in the next downturn of the world’s economy. China may even lead this downturn.

The Mafia used cement shoes. He who wore them sleeps with the fishes.

The Chinese economy will implode. When it does, over a billion people will get a first-hand look at what central planning, central bank inflation, and public works projects can do to waste resources.

This will be the great challenge to the Communist oligarchs. The Chinese know only two systems: the Communist system under Mao, and the present system, based on central bank inflation and Keynesian capital allocation. They have known only political economy. The masses have placed their faith in the Keynesian system. It has performed well for 35 years. When it crashes, they will not know what to do, what to believe, or how to restore their prosperity.

There are at least 90,000 public protests a year in China today, which the government attempts to conceal. How many will there be then?

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9 thoughts on “China’s Cement Shoes: The Crash Is Inevitable

  1. KrazyKyngeKorny says:

    That's not unlike what BO has done to America.

  2. How easily we can replace the word 'Chinese' with 'American' in this paragraph:
    [quote]The Chinese/American economy today is a mad mix of free market entrepreneurship, central bank counterfeiting, Keynesian mercantilism, and Communist central planning.[/quote]

  3. Litecoin says:

    And Bush before him, and Clinton before him, and Bush before him, and Regan before him, and Carter before him, and Ford before him, and Nixon before him… whew now I'm out of breath!! Don't forget it was Nixon who declared that "we're all Keynesians now."

  4. 1baronrichsnot1 says:

    Yep, the writing is on the subway walls.Keynesian economies last about as long as it takes to tax the people into oblivion. Break the middle class, destroy the jobs, we all know that, except the politicians! They are lawyers without a hint of economic sense! Out economist with any power are the fed, the banks, the traders, and the stock market fiasco. Print money, give to donors, buy stock! Leave the rest of us high and dry. You wind up with worse case of fascism, no middle class, and the accompaning marxism, mixed with a lot of eliteism and aristrocracy. It's been done to death and always the same result. All the hell Keynesian economics is about is financing by gov't of social programs and the propping up of mismanaged banks, a mismanaged and broke gov't heathcare system, who consider themselves the untouchables. Regulations and laws galore, no equal protection, I ask you, what more could a man want?

  5. I have felt for some time that the Chinese government were not our friends. They have lured less than smart American politicians into their financial maze. Chinese refer to China as the Middle Kingdom. It is not heaven but it is better than all other on Earth. Their leadership is smart, but they have no regard for the intelligence of others. But who would ever have guessed that our greatest weapon against them would be a dead Brit named Keynes. At last old John Maynard is good for something. See my blog at http://cranky-conservative.blogspot.com

  6. Brian_R_Allen says:

    …. How easily we can replace "Chinese" with "American" ….

    True, we can and we even may.

    But there are such differences as make comparisons invalid .

    We have only one Obama and will soon be rid of him. Peking's pack of perilously pernicious predators – that makes pikers of Obama and his gang of thugs – is going nowhere.

    As was witnessed during the presidencies of Dwight David Eisenhower and Ronald Wilson Reagan and during the period of prosperity stimulated by the 1994 Gingrich Congress and while the Cli'ton Gang was only incidentally besquatting and bemanuring our house, We, The Sovereign American People, are uniquely able to turn America on a Dime — and may – beginning at Noon on January 20 2017 – in 978 days, seven hours and thirty-seven minutes but who's counting – be counted upon to do so.

    "China," (75% of whose land belongs to others – is the looting, lying, murdering Peking pack's murderously-colonized evil empire) still has around a billion people living pretty-much as did their ancestors – four hundred years ago — and they and it will be old long long long (little play, there, on lottsa Longs – nothing Wong with that!) before it will ever be wealthy!

    "China" is done.

    Put a fork in it!

  7. redmeatstate says:

    We;ve been on this track since Woodrow Wilson began it and FDR exacerbated it. We will, at some point, be force to return to a Natural Economy, not a political one, and not one propped up by phoney baloney fiat reserve money.

  8. Robert Rose says:

    When China crashes, they will take the USA with it.
    The first thing the Chinese will do when the going gets tough is call in all those loans and property held in the USA. Suddenly our money will become very tight when squeezed by the Chinese looking for capital to try to stay afloat. When they pull the $$ rug out from under our economy, we also will tank. So much for international free trade agreements. If more companies were smart, they would pull their manufacturing capability back from China before it's too late.
    The second thing China will do: attack. Look at the history of countries facing sour economies. They will look to take the people's minds off their domestic problems by starting larger international issues. It is scary to think that much of the manufacturing capability that helped us win WWII is now in China! I don't know that the Pacific Ocean will be big enough to shield the mainland this time. China has ballistic missiles, two aircraft carriers………

  9. China never payed us back for WWII. Mao simply said,"Thanks for the gifts!" We should demand our payments now. In gold!