Could a Tight Chinese Monetary Policy Trigger a Collapse?
Marshall Auerback offers still another possible trigger that could set our global economy spiraling on the downside. Go to www.prudentbear.com/internationalperspective.asp to read his always excellent weekly column. This last week, Marshall’s article was titled, “China Tightens-The Beginning of the End of Global Relation?” Marshall points out how dependent the world has become on growth in China. But now there are some signs that China may be setting out a more stingy monetary policy. A tighter money supply in China would in theory at least lead to a stronger currency which should delight our Treasury Secretary who is pushing China to revalue its currency vis–vis the dollar. But everything in economics has at least two sides to it. In concluding his essay, Marshall said the following: “After so many years of false starts, it can hardly be comforting to contemplate a reliance on Japan as a potential offset to China’s growth, but this is the best-case scenario. The worst case is that Ch
