The end of China’s boom

Like the US, China too got fat on fake money. Now, China's doom is not far away.

Economy graph: descending arrows, cash yuan bills and flag of China - stock photo
(Image credit: Getty Images)

The thing that doomed the American empire more than any other was its currency. When the US substituted a fake, paper-only, dollar in 1971, it set in motion a financial doomsday machine. 

For a long time, it seemed to Americans and foreigners alike to be a blessing, an “exorbitant privilege”. We didn’t have to make things; we could just print money. Since the dollar was the world’s “reserve currency”, other nations took it willingly and even lent it back to us by buying more of our bonds. But now, the great weakness of paper money is (once again) becoming apparent. Since it can be produced at will, it can also be lent out at will – but in a crunch, it gives way. 

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Columnist

Bill Bonner is an American author of books and articles on economic and financial subjects. He is the founder of Agora Financial, as well as a co-founder of Bonner & Partners publishing.