China’s Banking Assets Are $52 Trillion, Growing By $40 Trillion Since 2008: “This Is What Hyper MMT Looks Like”
Thermodynamics
“The interaction of inflation-focused monetary policies in the west and China’s mercantilist model created what I call The Refrigeration Mode,” said the CIO, sitting atop his prodigious pile. “The process has been ongoing for twenty years,” he continued. “The inflation-focused policy framework is based on the fallacy that you can model an economy using an equilibrium framework,” he said. “Wicksell was the father of classical equilibrium in economics. He observed that for a pure credit economy – with no external gold backing for money, just credit-backed deposits – there were no clear forces that would drive the system toward equilibrium. To the 19th century Wicksell, a pure credit economy was a fictitious, futuristic concept, but it is effectively what we have today – and it is a path dependent system.”
“What is a path dependent system?” asked the CIO, not waiting for my answer. “Take the male driver when lost. Despite all evidence around him, the male believes he is not lost. He is, of course. And yet has no need for a map. The male is merely taking a different route, maybe a better a route to the same inevitable, incorrect destination. That destination being equilibrium. It’s all taking place in the male’s head. The reality on the road, meanwhile, is rather different. He turned left at the fork in the road when he should have gone right. There is, now, no natural force – other than blind luck and a tactful passenger – which can rescue him. Further wrong turns, and his destiny await. His destination is path dependent.”
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