Friday, January 8, 2010

Liquidity Bubble Looming

Zerohedge had a foreboding post about China and their liquidity tightening.

While the domestic money printing syndicate refuses to accept the glaring reality that endless money printing causes unavoidable hyperinflation (the only question being when), China has decided it is time to start closing the spigot. Bloomberg reports that, "China’s central bank began to roll back its monetary stimulus for an economy poised to become the world’s second-biggest this year, seeking to reduce the danger of asset-price inflation after a record surge in credit. The People’s Bank of China yesterday sold three-month bills at a higher interest rate for the first time in 19 weeks."

If the Chinese (and others) are tightening up their credit and not buying up our debt... you know where that will lead us? We have to buy our own debt (we already are).

How about this haiku (yeah... I know... that is Japanese)

Spending Spree Over
Interest rates going up
Hang on to your hat.

OK... your turn to make one up.