Lucky

Deflation, not inflation, is the biggest global risk moving forward. China's model of subsidizing loss making manufacturers is broken, and its debts are unsolvable. The longer it takes to open its capital account, the more damage will be done. The end game is near.

@onechancefreedm It’s crazy that this view isn’t consensus. China is being forced to bend a knee. More volumes at increasingly lower prices wonky exacerbates the same debt spiral China is fighting to get out of.

China’s Export Surge: Desperation Disguised as Strength What these charts show is a warning sign. The sudden spike in exports to countries like Hungary, Morocco, Ecuador, and Liberia isn’t evidence of new demand. It’s the result of a system that can’t slow down. China’s domestic economy is running cold, households are cautious, property is weak, and businesses are sitting on too much capacity. But the factories keep humming, because shutting them off would mean layoffs, defaults, and political risk. So Beijing’s answer is simple: if the demand isn’t at home, push it abroad. Exporting Their Way Out of Deflation China is trying to export its way out of deflation. Prices inside the country are falling, and once that mindset takes hold, when people start waiting for things to get cheaper, growth gets even harder to revive. The only way to keep production lines moving is to find buyers somewhere else. That’s why you see goods now flooding into smaller or peripheral markets like Jordan, Suriname, Zimbabwe, places that can’t possibly absorb these volumes on their own. Many of them are just conduits: ports, free zones, or reexport hubs that help disguise the flow back into Western markets. The Global Deflation Feedback Loop The problem is that this strategy doesn’t make the deflation disappear, it just moves it. When China dumps cheap goods abroad, it undercuts local producers and drives prices lower everywhere else. At first it feels good because consumers get cheaper imports, inflation cools but over time it squeezes margins, weakens investment, and slows growth across the system. It’s a short term fix that spreads the long term pain. We saw shades of this in Japan’s post bubble years, when excess industrial capacity kept global prices anchored for decades. China risks repeating that pattern on a much larger scale. A System That Can’t Slow Down So when you see these export spikes, don’t mistake them for strength, they’re signs of an economy trying to outrun its own problems. Beijing can’t afford a production collapse, so it’s pushing deflation outward and calling it competitiveness. But the more they export, the more they transmit their slowdown to the rest of the world. It’s a global version of musical chairs, and eventually, someone’s left holding the bag. This is about how systems behave when they’ve been built for endless growth but run into limits. China’s export machine is doing what it was designed to do which is produce, but the world it sells into is no longer expanding fast enough to absorb it all. The result is what we’re seeing now: data that looks like power, but underneath, it’s pressure. The story is that China’s system is straining to keep balance and every surge of exports is just another sign of that imbalance shifting from one place to another.

While everyone seems focused on US banks, no one seems to be watching what is actually driving gold prices.

@DrJStrategy Markets seem asleep on this. Demand and inflation is collapsing in real time.

US 10 Yr under 4% What happened to all the Pundits who said Trumps policy would send yields sky high? Wrong again.

US interest rates are collapsing. WTI and Brent is collapsing. Commodity currencies (AUD/CAD) are collapsing. A macroeconomic change is in the air.