The World Is Playing A Game Of Currency Chicken And The Result Will Be A Crash
Mike “Mish” Shedlock, Global Economic Trend Analysis
Dec. 6, 2010
China’s is overheating. Consumer prices in aggregate rose at an annual rate of 4.4% as of October. Food price are up 10.1 percent according to China Financial Daily.
Moreover, accelerating inflation is hurting profit margins in China’s service sector. China’s non-manufacturing PMI fell to a nine-month low in November, with new orders in consumer service industries showing outright contraction.
In response to these inflationary price pressures, China declared a shift to a “prudent monetary policy”, including price controls at Walmart.
This begs the question: Since when do price controls constitute “prudent policy”? Price controls have never worked in history and this time will be no different.