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China Stock Market Crash in 2016

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    China has seen plenty of downgrade in the start of this year. Well the china being the established market, it is going to be tough for the us to maintain its top position keeping in mind various events like fed rate, stock market turmoil and oil prices in the global market, china being the highest in the gold reserves, the china stock market crash has bring china to a halt only for a little while in the start of 2016, but the china is speeding up with applying negative interest rates. Well the US vs. china market is gonna be a big thing to see whereas Germany with the refugee problem is gonna suffer with civil war on a large scale. Now is the condition to wait and watch as this big economies hit a turmoil.

    Source: China Stock Market Crash in 2016

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    Wow, so there is a lot to unpack there.

    China has realized something we in the US haven't learned yet. It's ok to "print" dollars if the dollars you create result in increased use of resources and labor and ultimately productivity.

    Here in the US, we fear inflation more than we fear unemployment. This is because when we, as a nation, think about unemployment the common cause is described as;

    "Too much money chasing after too few goods"

    When defined like this, money appears to the the problem, or more specifically too much money is the problem, and historically this is exactly how we have approached the problem. When inflation sets in, we raise interest rates, this slows consumption and in turn slows demand, and the result is that people get laid off.

    Unemployment is used as the solution to problems of inflation, but let's look at the cause of inflation like this;

    "Not enough supply to meet demand"

    If inflation sets in, how can we deal with the problem without using unemployment as a fix?

    During WWII spending spiked massively. The government in turn started a public campaign to encourage the public to buy bonds. When people diverted potential consumption into savings, that prevented potential inflation AND paid income years later. It's my theory that one of the reasons the 50's was such a heyday was that people had high levels of savings thanks to the bonds they purchased when government spending was massive and so was productivity.
  • Strongly Liberal Democrat
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    Not enough attention is applied to the definition of saving: the time period, law of the land. Saving in the 50's is entirely different from saving today. Also wildly different are the effects of saving.

  • Independent
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    china has its own issues including a desperate need to maintain social stability. decline in growth is going to mean mass migration again. only this time the countryside will not be able to sustain the migrants.

    gold means nothing. china is involved in both economic warfare against the u.s. and is profoundly tied to the u.s. there is no market anywhere, especially if the eu unravels, that rivals the u.s. for china to sell goods.

    this does not mean that all is hunky-dory, far from it. it does mean that attempts to view macroeconomics through one lens must fail. ignoring social, psychological, environmental and foreign (projected domestic) policy inputs will result in skewed theories and hypotheses.

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    China's problem, imo, is related to their handling of the 2008 global econ crisis. As assets dwindled, the Chinese public sector was encouraged to borrow and that is in fact what happened. The problem is that private sector borrowing has several downsides, for one, people have a very finite limit to the amount they can borrow and if borrowing and the productivity it creates does not result in in a proportional amount of wage growth, then personal debt relative to wages will rise. The result is decreased consumption and decreases in demand. Even if borrowing levels off (as opposed to declining) small decreases in consumption will be realized, again, unless there is a proportional increase in wages.

    IMO, China is using economics to it's own benifit, it's not "waging a war" in that it's intention is primary the harm of other nations, but rather the increase in it's own power, influence and standard of living. I can't say I blame China's policies one bit. We also have the power to manipulate our own destiny but the US voter isn't educated enough on fiscal and monetary policy. Too many people believe that the US economy is run like a household. They believe that the US government can go bankrupt and one day be unable to pay it's debts. People don't understand the affect of the trade deficit or popular (and ruinous) notions like a "balanced budget".....

    Of course, the reason I believe that people are so uneducated about economics that the ignorance leads to wide swings in our economy that benifit those with the most money. It's not government that is the problem, it is the influence of money on our government that is the problem.
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    Uncommon Cents Wrote: China's problem, imo, is related to their handling of the 2008 global econ crisis. As assets dwindled, the Chinese public sector was encouraged to borrow and that is in fact what happened. The problem is that private sector borrowing has several downsides, for one, people have a very finite limit to the amount they can borrow and if borrowing and the productivity it creates does not result in in a proportional amount of wage growth, then personal debt relative to wages will rise. The result is decreased consumption and decreases in demand. Even if borrowing levels off (as opposed to declining) small decreases in consumption will be realized, again, unless there is a proportional increase in wages.

    IMO, China is using economics to it's own benifit, it's not "waging a war" in that it's intention is primary the harm of other nations, but rather the increase in it's own power, influence and standard of living. I can't say I blame China's policies one bit. We also have the power to manipulate our own destiny but the US voter isn't educated enough on fiscal and monetary policy. Too many people believe that the US economy is run like a household. They believe that the US government can go bankrupt and one day be unable to pay it's debts. People don't understand the affect of the trade deficit or popular (and ruinous) notions like a "balanced budget".....

    Of course, the reason I believe that people are so uneducated about economics that the ignorance leads to wide swings in our economy that benifit those with the most money. It's not government that is the problem, it is the influence of money on our government that is the problem.

    I don't know of any other phrase to use to describe deliberate policies that have as their goal economic dominance.

    Do I blame China for their policies? No. They are simply engaged in the same aims that every other power seeking the heights has engaged in. The problem lies in whether or not they will fall into the neoclassical trap including free trade. So far they have not yet. But time will tell.