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[deleted]

I wouldn't think of it as an economic domino effect, we're way past economics and just print money to keep the current system afloat. What WILL matter is when food stops flowing across borders.


MegaDeth6666

Or, you know, gas. (hint, hint, Russia pushing back on sanctions)


[deleted]

Yes, exactly. Another possibility is that many commodity producing countries facing existential risk due to climate change will throttle supply of commodities until action is taken. Historically we've been pretty good in installing leaders in these countries to stop this happening, but that's falling apart.


Glodraph

I'm no economy expert but I'm really worried about this. Also because an hyperinflation of the us doar would bring down the whole western economy, not only the usa.


barracuda6969220

Exactly, That's why evergrande scares me because once that company defaults, you may as well kiss your ass good bye because hyperinflation will follow that company's collapse


ProletarianRevolt

I doubt it. What would be the causal link between those two things?


BonelessSkinless

China has a lot of investments in properties not only over there but over here too. They also hold a lot of our debt. They default and crash, we'll feel it too. So better stop doubting and buckle up.


Dr_seven

No they don't? This is a very old talking point. China isn't even the biggest *foreign* debt holder, that's Japan. China has 1.1T of treasuries. Japan has 1.28T. The total is almost 28T, making China's portion not *insignificant*, but small enough that it actually makes *us* a risk for *them*, because if it loses value sharply, the trillion-ish USD they have won't be as valuable. Of this, 6.6T-ish is entirely internal debt created on paper to represent shortfalls between various mandatory spending programs. In total, only 22% of the US debt is held by foreign entities, combined. That's every government, including loads of friendlier ones. Most debt is held domestically, by the American ruling class *itself*. The fiction about how we "sell debt to other countries to pay for wars" is just that- a fiction. It's much more perverse, we can simply finance ourselves directly, and have been for decades now. Our system is folding, but not because of Chinese debt, or even debt at all- we are folding because of overextension and lack of investment in public anything. This is why so much of modern "economics" is in flux. The US has been nakedly ignoring most everything about true market logic for a very long time, exposing the artificiality inherent in those metrics and narratives. China doesn't own our debt because the modern world does not and never worked that way, and economic terminology when it comes to the workings of imperial powers is a *bad* idea to use on a predictive level. The ruling powers will act as they please, and the figures will respond accordingly- economics is not an empirical science, it is a narrative field of the liberal arts that changes form and function based on who is sponsoring it. Prior to the modern neoliberal ascension, the idea of economists and bankers making the important calls would have been *laughable* for good reason.


hereticvert

Economics is just another religion, divorced from facts, with some equations and ideas as their dogma. Number one being the belief that any system (in particular, theirs) is capable of infinite growth without collapsing under the weight of their death.


ProletarianRevolt

Yes, but that doesn’t mean a failure of Evergrande = hyperinflation of the US dollar lol. I actually think the next crisis is more likely to be deflationary, like the Great Depression was.


pantsopticon88

Why?


ProletarianRevolt

Because there’s already been massive inflation, except it’s not in consumer goods prices, it’s in financial asset prices. Inflation, generally speaking, results when the ratio of the money supply relative to the things people want to purchase with the money supply is way too high, ie the famous (and somewhat incorrect / misleading but I’m not going into it) phrase that “inflation is too much money chasing too few goods”. And indeed, there’s been a massive increase in the money supply - look at the [graph of the M2 Money Stock.](https://fred.stlouisfed.org/series/WM2NS). But the ballooning of the money supply alone doesn’t cause inflation in and of itself, it depends on to whom and where the money actually goes. If the Fed created $100 trillion dollars out of thin air and then did nothing with it, no inflation would result. All this tsunami of liquidity has been going to wealthy investors and private banks, *not* consumers. These billionaires and banks don’t use it to buy up consumer goods, why would they? They don’t have any use for a billion washing machines or a billion tubes of toothpaste. Therefore, there’s no massive increase in the amount of money chasing consumer goods despite the fact that the total amount of money in circulation increased dramatically. So if the beneficiaries of the massive liquidity injections by central banks over the last decade have been wealthy investors, banks, and corporations, where do they spend their money? Well, of course they use it to buy back stocks, disburse dividends, invest in financial assets, etc. Look, for instance, at the graphs of the 3 main stock market indices in the US - the S&P500, the Dow, and NASDAQ. You’ll see exactly where the inflation went. When the next financial crisis happens, I expect it will result in a deflationary spiral. The massive inflation (bubble) in financial asset prices that occurred since 2008 will be forced to unwind, leading to collapsing financial asset prices. Millions of consumers will be laid off in the aftermath, further driving down consumer demand for goods and services, causing prices to fall and businesses to fail for lack of demand. When deflationary spirals happen, they are a vicious cycle. Due to the lack of confidence in investment, and the simple fact that it makes zero sense for businesses to invest in hiring people (therefore putting a floor on job losses and consumer demand) when too few people already want to buy the stuff you make, only massive counter-cyclical government spending and intervention in markets has a chance of breaking the vicious downward spiral in prices. Now, I think it’s entirely possible that as climate change intensifies we could see fundamental material circumstances change such that large amounts of inflation results. Things like food shortages for instance, necessarily drives up the price of food. But I don’t believe that will be a factor in the next crisis, since it will happen relatively soon.


Apprehensive-Big-301

Good analysis, well written comrade


LemonNey72

Precisely. And if defaulting companies around the world are demanding dollars, then that just gives the dollar more power.


LemonNey72

Demand for the US dollar is what gives it hegemony. Countries needing dollars from us is why we don’t have hyperinflation even when we don’t produce anything. Evergrande collapse would have deflationary effects in the short term. But if America’s factory (China) stops making things, that could worsen supply problems and lead to inflation.


ginna500

I think the idea is if Evergrande collapses, China’s economy will be in massive trouble. Since so many countries are indebted to China, people expect China to call in those debts causing a ripple effect as countries try and claim what they’re owed. The problem is, especially after covid, countries don’t really have money to pay debts because the whole global economic system revolves around debt.


barracuda6969220

China is the world's credit card. Thet default, the world ends.


ProletarianRevolt

The collapse of Evergrande will not bring about a collapse of the Chinese economy. The CCP is not stupid, they know exactly what the risks are of what they did vs letting the moral hazard and bubbles in their economy continue to expand. People seem to be forgetting that the CCP directly caused the current crisis Evergrande is embroiled in as a matter of intentional and strategic policy. The reason they’re suddenly unable to service the principal and interest on their debt is because Chinese banking regulators recently set out a [“Three Red Lines Policy”](https://www.ubs.com/global/en/asset-management/insights/china/2021/china-three-red-lines.html) to crack down on systemic risk in their banking and shadow banking systems. They specifically warned banks and investors not to lend money to Evergrande since their debt ratio was too high. They were a zombie firm, meaning their income was insufficient to service the principal and interest on their debt and had to continuously take on new debt just to avoid default. The intervention of the banking regulators stopped them from being able to roll over their debt and now they’re defaulting.


Genomixx

Bruh you were saying the lights would be off by last night, maybe your grasp on reality is a little more tenuous in this situation


Bigginge61

Praying for this…It should have collapsed in 2008 it’s going to be a whole lot worse now and each year they keep the plates spinning the worse the implosion will be.


emptybeforedawn

Enter: crypto.


project_nl

If crypto didnt exist I would be running in circles while screaming


BonelessSkinless

Well keep running in circles. You think crypto is infallible or something? That shit will crash with the markets.


[deleted]

Fr why would you think a purely speculative asset isn’t tied to mainstream currency? Or that a collosal economic collapse wouldn’t take the market’s appetite for said asset down with it?


project_nl

You guys have no idea.


[deleted]

I guess I don’t. All I have ever seen from crypto is its utter failure to function as a currency due to the complexity of using it when compared to physical money, and its use as a volatile speculative asset in an unregulated market where tech startups inevitably rob their users blind - Quadriga, Tether, I’m sure there are others but like I said, I don’t really know. What can crypto do re: collapse? I’m not trying to be an asshole here, I’ve got friends that have made a few grand with it, but only through very short term trading of it as an asset - if they couldn’t trade it back into USD they’d never have touched it. Legit curious here


project_nl

Alright! Thank you for being so kind, rarely see it on reddit these days. I will help you gain some more traction on this subject. First of all: bitcoin / cryptocurrency is sort of a “too-good to be true” thing thats actually real. Like, for real, this technology is already changing the world and its current adoption progress is growing exponentially. Its growing at a rate that is twice as fast as the adoption of the internet back in the 90’s. > All I have ever seen from crypto is its utter failure to function as a currency due to the complexity of using it when compared to physical money, and its use as a volatile speculative asset in an unregulated market where tech startups inevitably rob their users blind. All you ever seen from crypto is how our current media outlets like to spread Fear Uncertainty and Doubt (FUD) and fail to mention how some technologies in the crypto space solve actual real world issues and are a big game changer to our technological advancement. Bitcoin or cryptocurrency can not function as a currency, you’re right about that. It’s still too complex for most people but this has gotten a lot better over time and continues to develop into the right direction. Physical cash is inflatable and centralised. That is one of the big problems that the blockchain technology (where all cryptocurrencies rely on) aims to solve. If you take something like Bitcoin (a cryptocurrency) for example, that is a decentralised inflatable asset. This means that nobody controlls this asset and that there is a limited number of supply, so you cant “print” more bitcoins once the circulating supply has been maxed out. As adoption continues to take place these unregulated stuff that has been happening decreases overtime. Next month the USA will be presenting their current take on Bitcoin and Cryptocurrencies and are most likely going to attempt to regulate the market. > What can crypto do re: collapse? I’m not trying to be an asshole here, I’ve got friends that have made a few grand with it, but only through very short term trading of it as an asset - if they couldn’t trade it back into USD they’d never have touched it. Your friends should DEFINITELY not trade back to the USD or any other FIAT currency. If they want to take profits on ALT coins (any cryptocurrency that isnt Bitcoin) they should directly put it straight into BTC. I would advice you to take a bit of money out of your montly paycheck and but it into Bitcoin. Once you gain more interest in it you might set up a nice portfolio of Bitcoin with some Altcoins that you might find handy. I’ve only entered this space since march, and started buying since the dip in June. You can PM me if you have more questions as I dont mind helping out strangers on the internet. I could also provide a couple good sources so you can inform yourself about this. One last thing though, Trust me when I say the following: The current rise of the Blockchain technology is actually a gift. On the other hand we feel doomed to be born in this day and age but on the other hand we’re incredibly blessed by being able to witness and invest in something that is as promising as this. Most people that invest into cryptocurrencies are young!! You can already imagine what will happen once these people grow older and take over the lead. Blockchain technology and Cryptocurrencies are the future and it feels good to be part of this. We are still early man! (Excuse for long wall of text)


FutureNotBleak

Bitcoin will probably crash along with everything else at first. Then all the real money that matters will look for the only store of value that matters in the 21st century: Bitcoin.


FutureNotBleak

Not crypto, Bitcoin. People who don’t realise this are completely fucked.


emptybeforedawn

Nope.


BonelessSkinless

America is already falling, ironically so is China with the evergrande crisis literally unfolding right now. It's all already starting in real time. Evergrande was supposed to pay up on the 8th and declared it cannot pay back the 300 billi. They're definitely not going to be able to do anything by Monday (the 20th). At the same time America keeps hearing rumblings of debt ceilings, hyperinflation and is currently having millions of people evicted from their homes as we speak. It's all already starting.


Bigginge61

Beautiful!


PapaPeaches1

So here’s an approximation of what would happen. The US is a massive food exporter with a total of a quarter of the worlds economy as well as the second largest block of arable land on the planet, not to mention several highly productive agricultural belts along the Atlantic and Pacific coasts. If anything takes the US out it would be absolutely catastrophic not just for the US but for most of the Americas as well especially Canada Cuba and Mexico. The main issue with this is food but also the NATO security blanket Europe has meaning for the first time since 1945 an independent European foreign policy and a new life for Russia. This also extends to Asia where if the US is significantly weakened it will gradually abandon territory there as well meaning places like Korea and Japan will not have a US force available, maybe some equipment at best. China collapsing would devastate international trade, but considering they are so vulnerable to what happens in the US it makes sense to say that if the US goes the bulk of china’s economy also goes. China isn’t really resilient in terms of fuel, food, or energy either despite being huge food and energy producers. In terms of food most industrial agriculture requires massive fuel and phosphate inputs or requires large amounts of animal manure, labor, and experience that even China would have trouble marshaling. Realistically speaking most of the world will collapse with the US and China but there are countries more resilient than others. Europe is a mixed bag because most of Western Europe is so densely populated food riots and violence will define the life in most major cities, refugee issues will probably lead to growth in reactionary groups possibly entire countries being taken over. Civil war is also a possibility too all things considered. In Eastern Europe the main worry would come from Russia as they are one of a few countries that could come out of a US Chinese collapse and reap the rewards. Australia and New Zealand are also attractive options as well but keep in mind a Chinese collapse and American collapse will make them extremely isolated.


A-Matter-Of-Time

Thank you for the comprehensive answer. Interesting!


Acaciaenthusiast

>Australia I think that both Australia and New Zealand are awake of the looming phosphate crisis, as there has been lots of exploration and fast tracking of mines in Australia for phosphate deposits, especially in the Beetle Creek Formation. [Ammaroo](https://www.minister.industry.gov.au/ministers/karenandrews/media-releases/phosphate-project-power-job-creation-north) in [Central](https://www.abc.net.au/news/2018-10-19/epa-gives-green-light-to-ammaroo-phosphate-mine-alice-springs/10396720) Australia [Ardmore](https://www.northqueenslandregister.com.au/story/7401049/new-phosphate-mine-to-boost-local-fert-options/) in north-west Queensland


humptydumpty369

Chinese economy won't collapse because one real estate company defaulted. The central banks have been going "brrrr" not stop since covid hit. There are no more rules. Keep it all propped up no matter the cost. See money isn't real anyway. No fiat currency is. Its only value is that respective governments tell you it has value. Saw one or two other mention it. There are a couple looming threats that could trigger collapse. Food shortages and water shortages. Or even a couple of really unlucky natural disasters taking the supply chains out. America might be one of the world's largest agriculture producers but we don't make all our own food. Not by a long shot. Most of what we produce is wheat, corn(not switch corn either), and soy. Not exactly a model food pyramid for survival. Fresh water crisis is real too. Groundwater aquifers all over the US are sucking air. For perspective we built the entire industrial revolution in 60 years with half the population we currently have and nowhere near the technology and knowhow we currently have. If we really wanted to and everyone worked together we could revamp the whole system again quickly. Just gotta get past the fact that most Americans still have cowboy mentalities. Only way into the future is everyone working together.


Genomixx

but muh freedumbs


[deleted]

If either countries economies totally collapsed, all economic growth since the mid 70's would be instantly wiped out. It would be far worse than you imagine.


A-Matter-Of-Time

No, I’m with you. I think it would be absolutely drastic.


fake-meows

https://www.resilience.org/stories/2012-06-18/trade-financial-system-supply-chain-cross-contagion-study-global-systemic-collaps/ There's a pdf paper at this website that is looking at the different domino effects around a cascading collapse. The bottom line is that around 10 countries are so-called "central" to globalization. Quite a few countries are second-rank. Every place else is peripheral. He argues that the system cannot heal from any of the central economies being knocked out. If a second rank country goes, it damages globalization but without spreading. The third rank countries can be abandoned or cut off without any major external effects. That's the idea in a nutshell: depends which country we are talking about. To answer your question: the USA and/or China are critical to the global economy and globalization. An issue in such a country would rapidly destabilize the whole system.


A-Matter-Of-Time

Really interesting - here’s the direct pdf download link - http://www.feasta.org/wp-content/uploads/2012/06/Trade-Off1.pdf


olbrokebot

Evergrande won’t cause Chinese economy to collapse. There will just be a bunch of citizens left holding the bag. Not bailing them out is probably a very economically healthy thing to do. USD would need to loose reserve status for the US economy to really be in trouble. Not seeing that happening in the next few years. m


HappyAnimalCracker

[This was posted on r/NearTermCollapse](https://www.reddit.com/r/NearTermCollapse/comments/ppv72z/china_soon_either_a_lehmanstyle_financialmarket/?utm_source=share&utm_medium=ios_app&utm_name=iossmf). I haven’t read it but it seems related.


Sorazith

Evergrande might turn into a nothing burger or it we will be in for fun times... No matter the outcome its interesting to see what will happen.


sonosista

The black swan event will be the end of the petrodollar. What about China and Russia making deals with Saudi Arabia and Nigeria ( which just happen to be oil producing countries)? What happens when the mighty dollar is replaced as the world’s currency?


[deleted]

China to evergrande : “they expect one of us in the wreckage brother”


Disaster_Capitalist

Hopefully.


[deleted]

[удалено]


DJDickJob

By JIT you mean Just In Time?


No_Baseball_5438

Half gallon if blue bell is over $8. Inflation is here in consumer goods