China Will Accelerate Global Slide Into Deflation → Washingtons Blog
China Will Accelerate Global Slide Into Deflation - Washingtons Blog

Thursday, December 11, 2008

China Will Accelerate Global Slide Into Deflation

Forbes writes "Deflation Descends Upon the U.S."

Mish provides the best analysis around on why we've got deflation, despite the huge increase in money supply by the Fed.

But the headline which really caught my eye this morning was the Wall Street Journal article entitled "Deflation Approaches for China".

China has been an enormous buyer of commodities and raw materials. When deflation hits China, the price of commodities and raw materials sold to China will fall also.

This will greatly accelerate the slide into deflation globally.

Of course, hyperinflation is coming down the road. But not for a while.

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