Before getting into the deeper issues - the first thing to put on the table is the CPI number itself. Who believes any financial number coming out of China?
Who believes that an economy can grow at 5,7 or 10% without experiencing any inflation? Who believes that an economy with excessive liquidity can hold prices down? Then there's the growing need to import more and more commodities... well, you can decide this one.
The real concern is whether currency games are going to become the new form of protectionism - a new form of trade war. With so many countries debasing their currencies - global inflation is certain to follow as more funny sovereign paper will be needed to buy real things. Now if we take the abstracts out of all this and remember that we are past peak everything - prices of all commodities are sure to climb dramatically. Some will be more intense than others.
Chinese inflation - you can bet the farm on it. But it is the new protectionism we are most concerned about and the trade of cheap, oppressed labour for scarcer resources. Who will level the playing field now?
Dr Peter G Kinesa
April 14, 2013