[PrimalDual]

I am not even sure they are learning much faster than the Japanese during their period of growth. Their progress definitely looks very Japan circa 1980’s to me. Either way the massive debts in their financial system seem like a test of the limits of Keynesian and Monetarists theories. With their absolute control of money supply they can increase it at will to compensate for a decline in consumption. As far as I can see only inflation limits a government’s ability to print money. China isn’t quite at the same level as Japan, the US and Europe in terms of having crossed that weird post-inflation threshold where central banks literally print trillions and still fail to meet their inflation targets. It might turn into a Venezuela but the interesting things happen if it doesn’t. What happens to the economy when the government prints huge amounts of money but still fails to produce growth or inflation? What does that economy looks like? Moreover why doesn’t printing money cause inflation in the same way it did before?

[leereeves]

> Moreover why doesn’t printing money cause inflation in the same way it did before?

One possible explanation: printing money doesn't cause consumer price inflation because so much of that money never reaches consumers.

[seanmcdirmid]

Ya, as long as housing prices aren’t kept in the inflation index, you’ll never see the money being printed.

[njarboe]

Or stocks, gold, commodities, etc.

[seanmcdirmid]

Commodities maybe, but most of the new liquidity is being soaked up in the real estate bubble.