John Rubino of Dollar Collapse joined us for our Monday discussion. He says, “It’s amazing how quickly China went from being the world’s savior to its biggest danger.” To recap:
When the developed world stepped off a cliff in 2008, China responded by borrowing about $15 trillion and spending most of it on infrastructure. Roads, bridges, skyscrapers, power plants, whole cities went up around the country. The resulting demand for everything from iron ore to wind turbines helped offset contractions in the US and Europe, turning an incipient global Depression into nothing more than a severe recession. But government-directed growth on this scale produces a mountain of misallocated capital which eventually comes back to haunt its owner. And that’s where we are now.
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