China Cuts Rates; Diverges From US Policy

The PBOC cuts rates to stimulate the Chinese economy. Were you forwarded this email? [Sign-up to Rude Awakening here.]( [Unsubscribe]( [The Rude Awakening] China Cuts Rates; Diverges From US Policy - People’s Bank of China - their central bank - lowered their borrowing rate. - This move contrasts with the Fed’s hiking cycle. - Imported Chinese goods are about to get cheaper. Recommended Link [Breaking: Ex-Pentagon Insider’s Disturbing Message for America]( [Click here for more...]( He warned about the 2008 financial crisis a full two years in advance. He’s predicted everything from the coronavirus crash, the election of Donald Trump, Brexit, and more. And he just went live with a disturbing new warning for America. One that could have devastating consequences for anyone that’s still holding stocks, cryptocurrencies, or cash on [2/10/2022](. If you have money in the markets, or you are worried about America’s financial future… You need to [heed his message]( now… because once this crisis hits it will already be too late. [Click Here To Learn More]( Sean Ring Editor, Rude Awakening Happy Hump Day! This week, I’m teaching a program for the newly hired graduates at Singapore’s best bank. It’s reinvigorating, as the students are now half my age. The darn kids keep getting younger every year! As they’re becoming operations and tech analysts for the bank, I take them through introductory modules on financial markets and products. Teaching is a hoot because not only do I get to hear the sound of my voice all day - and as a Rude reader, you know how much I love that - but I also learn a great deal about what young people entering financial services are thinking. It’s informative, to say the least. To wit, one of our daily exercises is to have a group of them give the “morning chat.” This exercise simulates what bank trading floors do every day. A member of each desk summarizes the previous day’s activity and what they’re expecting today. My kids just pick out one story that intrigues them and explains to the class what the event is, why it matters, and how it may impact their bank. Most presentations are on US stocks and stories even out here in Asia. But yesterday, our first group opened up with China. I was thrilled as I’d taken my eye off the China ball. Not only that, but it was a story on China’s monetary policy and not a tech story. It led to a 30-minute discussion of economics, which isn’t a part of their course, but I hope it stimulated them to explore the subject further. As for me, it gave me intellectual fodder for today’s piece. Briefly, and much to the chagrin of the Made in America brigade, imported Chinese goods are about to get cheaper. That’s because the PBOC just lowered interest rates, which will further weaken the Chinese Renminbi. While I sympathize with The Man, I’m happy about the new competition between central banks. I don’t know about you, but the last thing I want to see is “global monetary cooperation.” That’s just a technocratic way of saying, “We’re going to tax you via inflation, and we don’t even need to pass a law to do it!” All taxation is theft, or more specifically, robbery. But inflation is the most insidious tax of them all. It’s a tax levied not by a legislature - which is bad enough - but by the PhDs who run the central bank. And not one in a hundred Americans understands it properly, which is why they don’t know they’re getting hit with it until it’s too late. So let’s have a look at our Red Adversary to see what we may glean from their moves. It’s All About Us “Us,” in this case, is China. China cares about China. Not world peace or even absolute power. Just China. “Ambassador” is translated in Mandarin as “tribute giver.” That implies all who are not Chinese are barbarians and should pay for their lack of privilege. You can’t qualify for Chinese citizenship if you’re not ethnically Chinese. And if you can’t fill out the citizenship form in Mandarin, it’s a non-starter anyway. I wonder why the Left never complains about that. I mean, anyone can qualify for Western citizenship, right? Now China has taken its monetary policy in a different direction as well. The People’s Bank of China - the PBOC, its central bank - has lowered borrowing rates for real estate buyers. This move has come when Western central banks - especially the Fed - are thinking about hiking rates to fight inflation. (Yes, this is the very same inflation these overeducated idiots created themselves.) The PBOC is worried that China - which posted [torrid growth of 8.1% last year]( - is mired in a property mess. Evergrande is just one example of what’s going on over there. The embattled - and broke - real estate company urged bondholders to refrain from taking "radical legal actions.” It said it looked forward to communicating with various overseas creditors to formulate a debt restructuring plan. So China has taken a page out of [The Ben Bernanke’s]( playbook and cut rates. With the property sector's downturn seen persisting into 2022 and the fast-spreading Omicron variant dampening consumer activity, [many analysts say those easing measures will be necessary](. Between us, these analysts don’t have a good track record. The Contrast [Bloomberg posted an informative article]( contrasting the situation between East and West. Let’s look at some of the best stuff: The UK’s consumer price index is soaring, pressuring the Bank of England to hike rates, not cut them. Due to ECB money printing and their idiotic green policies, Ze Germans have seen energy prices roof it. They should’ve followed France’s book, in this instance, and kept their nuclear plants. The European Central Bank will almost certainly start to hike rates, along with the Bank of England and the Fed. And don’t leave out the Canadians, whose cheap money era has ended as well. They’ll have a more challenging time dealing with higher rates, as their debt is the 6th highest in the world. Recommended Link [Cryptos Are Set To Explode In 2022!]( [Click here for more...]( 2021 was a record year for cryptocurrencies… In fact, one expert calls it “the defining year” for crypto. But if you’ve missed out so far, it’s NOT too late to get started… Because many predict 2022 will be even bigger! [Click Here Now]( And look at these food prices. They’ve not only doubled over the last two decades; they’re enormously volatile. At least a cheaper renminbi will ease prices somewhat. After all, the cost of ocean freight from China has also leaped. This is no surprise, as Long Beach isn’t the only congested port, it seems. Look at the Pearl River Delta, where Hong Kong and Shenzhen are. Wrap Up As you would’ve guessed, I think the new direction in Chinese monetary policy is disastrous. Their money is already too plentiful, and printing more to lower rates will only add fuel to their inflationary fire. But it’s their monetary funeral, so to speak. As for The West, it should’ve raised rates a decade ago. And that’s no exaggeration. As soon as we were out of the woods of 2008, central banks ought to have reverted to normal. But the Fed couldn’t take its foot off the pedal. It never learns, but the hard way. And that means we’re all going to learn along with them. My Irish buddy Jerry just sent me a report from GMO’s Jeremy Grantham, who’s been shaking his head for quite some time over our muddleheaded monetary policy. I’ll read it today and report on it to you tomorrow. Until then, have a great one! All the best, Sean Ring Editor, Rude Awakening [Whitelist Us]( | [Archive]( | [Privacy Policy]( | [Unsubscribe]( Rude Awakening is committed to protecting and respecting your privacy. We do not rent or share your email address. By submitting your email address, you consent to Paradigm Press delivering daily email issues and advertisements. To end your Rude Awakening e-mail subscription and associated external offers sent from Rude Awakening, feel free to [unsubscribe](. Please read our [Privacy Statement.]( If you are you having trouble receiving your Rude Awakening subscription, you can ensure its arrival in your mailbox by [whitelisting us.]( © 2022 Paradigm Press, LLC. 808 Saint Paul Street, Baltimore MD 21202. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized financial advice. 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