China’s Local Debt “Out of Control”
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  • In China the big state owned banks — the ones that ultimately own all this bad debt — have the authority to print money if they don’t have it on hand whenever depositors want to make a withdrawal. All it takes is a phone call from central party headquarters. Since China’s entire middle- and working-class population have most of their savings in such banks (they are given few alternatives) you can imagine what might happen in case of a bank run. Call it “quantitative easing” Chinese communist style.

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