Collapsing Global Inflation Rates

posted in: China, Inflation | 0

A powerful, and frightening, conclusion as to what’s causing the recent trend of plunging global inflation rates via Bond Vigilantes:

“The consequence of China’s overinvestment was to create excess supply and overcapacity, which has proven disinflationary, but now China has to also contend with stagnating domestic demand. It’s tricky to see how this dynamic can be reversed over the short to medium term – indeed the Chinese authorities still seem addicted to falling back on infrastructure and investment spending in the face of weaker growth, which is unlikely to help. And if China resorts to depreciating its currency, then global deflation will get a whole lot worse.



Click over to read the full post: Explaining the collapse in global inflation rates – step forward China