Interesting, because it tells you where Gold and , by deduction, other materials prices are headed , courtesy the imminent fall in value of the by-now much maligned Greenback.
Not surprising, because, China seems to be expressing a sense of deja-vu. Half a trillion plus of extra money in circulation at near-zero-percent interest rates, is likely to see flight of capital into speculative pastures in Asia and other "investment destinations" , further emaciating the US$ value, not to mention the higher inflation due to rising import costs to a vastly devalued $$. This could well have a double whammy effect of lower consumption down the road, and adverse increase in exchange rate of the Renmimbi, throwing cheap Chinese sweatshops into a tailspin in terms of pricing and competitiveness, and quite possibly resulting in loss of jobs and closing down of factories. This, in turn, could even lead to social unrest in the worst case scenario, and derail, at least temporarily, any dreams of China making it big in short time.
But then, if the Chinese growth story had been groomed on a dose of free-market capitalism, they would have been used to the fact of hiring and firing, opening and closing down of business in the same vein, and would have learnt to take it as a fact of life and move on. But here is a growth story largely built in Government largesse and initiatives, and looking up to the Govt for every policy move and hand holding.
Free market capitalism, after all, does have it's merits, even if it is not the panacea for all the world's ills.
