The failed communist model of economics is now where more striking than in China today. Following a decade of decline China is now running out of cash. China has passed draconian laws on capital controls, price controls, and economic controls all to stop the flight of capital out of the nation. 

China has lost two trillion of its own reserves trying to support is funny money. We warned 4x traders do not buy own or hold this funny money. For those who failed to listen you have lost fortunes already. But wait the worst is yet to come.

China economists giving bad advice – the wrong advice – to their leaders – have exhausted CHINA critical foreign reserves. There are three forces at work here – lets illuminate each of those three:

  1. Debt: Chins is spending 300% more than it makes each year to keep employment up and avoid a SUPER CRASH in all its markets and asset classes, following by massive unemployment and potentials for serious revolution and social unrest.
  2. Currency Support: China currency buying power is a joke in world markets. The funny money is plunging in value is close to worthless today. To support the currency not falling further into a currency devaluation a SUPER CRASH the Chinese Government has made a CRITICAL ECONOMIC ERROR and earned two trillion of their nation’s wealth in less than 36 months – making SIDE BETS IN THE MARKET to support their own funny money. This is the ongoing policy. Today China reserves feel close the point Credit Agencies devalue China Credit standing and IMF and WORLD BANK ALARMS go off fully – 2.8 trillion under the 3 TRILLION minima safe requirement economics require.
  3. Currency Controls: To stop trillions leaving China from Industry, from investors, from insiders, from foreign nations, China has instituted BRUTAL ECONOMIC CONTROLS that preclude money free movement. Such controls include currency controls, price controls and market manipulations that NEVER WORK historically and only make PANIC worse historically. The run out of CHINA is going to pick up speed in 2017 until you see asset classes SUPER CRASH as we have predicted here. Very bad for the world actually. 

China is for the forward years in time – economically  TOAST primarily due to an execution of silly idiotic economic policies that historically always fail and never work. We have written for years of changes CHINA could make. Today the only option left is our SUPER BOND THEORY as set forth in this blog series There is NO OTHER OPTION save SUPER CLASS and rebalance China massive debt bomb, through default bankruptcy and asset rebalancing. ECONOMICS is unforgiving for mistakes. When POLITICS lead economics versus ECONOMICS LEAD POLITICS you always have bad choices and eventual repercussions to rebalance the economic accounts inside all asset classes. 

Faced with social unrest and revolution Chinese leaders are likely and predictable to preserve POWER to adventure into military distractions outside their nation at a time they can last afford to do it. However faced with their life and their possible death and the death of millions in a Chinese Civil war, they are historically most likely to opt for war. More and more of China’s population want open access to the world and the internet and are not confident in leadership that controls their media, controls their information, and limits their free access to the outside world in a digital age. Such antique political policies have a tendency to fuel a CHINESE SPRING or civil war. No amount of police state and suppress populations of people within a digital firewall from a few against the many political systems. It will not work.

The systems of the FEW AGAINST THE MANY versus the many holding the few accountable, is small number of political systems that are dying economically from predictable failed choice. These failed policies are going to create such enormous financial pain for so many CHINESE that the ability to lie and say as communist central planners ” IT IS NOT US IT IS THIS OR IT IS THAT” will be seen as a lie by the people are likely to deliver the worst fear of communist failed central planners – the people may well HOLD THEM ACCOUNTABLE …..fully accountable. 

China’s people think things are better than they truly are. If the Chinese People understood the economic alphabet there would be a revolution against the failed communist system of organizing economics for human beings.

It is history nothing personal. Nothing political. Just economics folks only economics.

Capitalism is more efficient ( by far ) than communism. It is well proven now. Over centuries and countless lives lifted or suffering. 

So CHINA at February 7th 2017, having side bet and lost trillions of dollars in a short time in a failed model to prevent the crash of its own currency – simply LOST trillions of dollars of hard reserves. The Chinese hard currency reserves are now plunging toward 2.7 Trillion and below under 3 TRILLION for the first time in a DECADE.

Bad planning.

This reality today will create a much too late and much too slow RETHINK of China overall policy to GREENFIREWALL their nations remaining wealth into the nation allowing none of it to leak out of the nation while communist planners hemorrhage wealth creating a BANKRUPT NATION. China is about to hard land with a full SUPER CRASH starting with debt defaulting and Real Estate asset crashes. No nation can restore such utter failure in economic policy as communist central planners create. The markets control economics and economics control the markets. Central planners can never not ever manipulation world economics.

We told you this weekend the markets would go DOWN. Monday and Tuesday the markets went DOWN. For the reasons we reported here. Volatility is about to get dramatic.

Berny Dohrmann – Economists keeping the truth on for you today


PS: This is all before TRADE WAR which is heating up to boil…..