Global PMIs stay weakish; US PMIs weak with inflation fading; China can't sustain factory expansion; India rises; EU contracts, eyes on RBA; UST 10yr 3.43%; gold and oil up; NZ$1 = 62.8 USc; TWI-5 = 70.5

Indeed, he probably could, he's no dummy.

Xi is smart, but the CCP are smarter.  They plan things literally 5/10/50/100 years out, acknowledge that the first policy isn't perfect but the main part is so modify it along the way.  As opposed to American/Western democracy politics which is revised, burned down or reset every 3-10 years.  This incrementalism means China won't suddenly do anything stupid, but eventually they will accomplish their goals, simply by pushing a little bit more on the things they want to change every year.  So far its worked, but will power go to Xi's head and make him a new Mao with the erraticism and irrational policy of a dictator?

One wonders if we will learn from them, cos it's a method to create a long term sustainable economy that is clearly working.  In the West, we suffer from short termism and have for decades.  I would argue the things that made America great was that they used to build everything for the future, decades out, whether it was their infrastructure (now in disrepair), industry, space programs, technology programs, education systems etc.  Now those things only seem to be concerned with short term and often corrupt thinking "how can I get the most out of these things to make sure I get re-elected or my mates get rich".  As opposed to "how can I make the future better for my grandchildren".  Add into that the culture wars, unregulated social media and they/we are on a road to slow collapse, with China taking over as the new world order.

26 million barrels.  Will not fuel the USA for 2 days!

Which means to say they have consistently been doing a terrible job, so you keep expecting them to be terrible?  Maybe we should give them credit for doing the right thing for once?

Some background:

The real cause of our current inflationary crisis

In May 2020, as I conducted my latest monthly analysis of the quantity of credit creation across 40 countries, I was startled to find that something extraordinary had been happening since March that year. The major central banks across the globe were boosting the money supply dramatically through a coordinated programme of QE.

This was the version of QE that I had recommended as the second policy step in Japan in the 1990s – namely, for the central bank to purchase assets from outside the banking sector. As these payments forced retail banks to create new credit in a massive burst of money supply not previously seen in the post-war era, firms and non-bank financial institutions that had sold to the Fed gained new purchasing power as a result.

Even the Bank of Japan, having previously argued for two decades that it could not possibly purchase assets from anyone other than banks, suddenly engaged in this unusual operation at the same time as other central banks, and on a massive scale.

The reasons for this coordinated policy are not immediately apparent, although there is some evidence that it was sparked by a proposal presented to central bankers by the multinational investment company Blackrock at the annual meeting of central bankers and other financial decision-makers in Jackson Hole, Wyoming in August 2019. Soon after this, difficulties in the Fed’s repurchase agreement (“repo”) market in September 2019, triggered by private banking giant JP Morgan, may have made up their minds.

Apparently agreeing with my critique that pure fiscal policy does not result in economic growth unless it is backed by credit creation, Blackrock had argued at Jackson Hole that the “next downturn” would require central banks to create new money and find “ways to get central bank money directly in the hands of public and private sector spenders” – what they called “going direct”, bypassing the retail banks. The Fed knew this would create inflation, as Blackrock later confirmed in a paper which stated that “the Fed is now committing to push inflation above target for some time”.

This is precisely what was implemented in March 2020. We know this both from available data and because the Fed, largely without precedent, hired a private-sector firm to help it buy assets – none other than Blackrock.

Having “cried wolf” about the inflationary risk of introducing QE in 2008, and following more than a decade of resolutely low global inflation, many banking and economic experts thought the Fed’s and other central banks’ similarly aggressive credit creation policy in 2020 would not be inflationary, again.

However, this time the economic conditions were very different – there had been no recent slump in the supply of money via retail bank loans. Also, the policy differed in a crucial aspect: by “going direct”, the Fed was itself now massively expanding credit creation, the money supply and new spending.

Meanwhile the COVID measures imposed by governments also focused on bank credit creation. In parallel with unprecedented societal and business lockdowns, retail banks were instructed to increase lending to businesses with governments guaranteeing these loans. Stimulus checks were paid out to furloughed workers, and both central banks and retail banks also stepped up purchases of government bonds. So both central and commercial banks added to the supply of money, with much of it being used for general consumption rather than productive purposes (loans to businesses).

As a result, the money supply ballooned by record amounts. The US’s “broad” money supply metric, M3, increased by 19.1% in 2020, the highest annual rise on record. In the eurozone, money supply M1 grew by 15.6% in December 2020.

All of this boosted demand, while at the same time the supply of goods and services was limited by pandemic restrictions that immobilised people and shut down many small firms and affected some supply chains. It was a perfect recipe for inflation – and significant consumer price inflation duly followed around 18 months later, in late 2021 and 2022.

While it was certainly exacerbated by the COVID restrictions, it had nothing to do with Russian military actions or sanctions on Russian energy – and a lot to do with the central banks’ misuse of QE. I believe the high degree of coordination of the central banks in adopting this QE strategy, and the empirical link with our current period of inflation, means their policies should be given more of a public airing. But the subsequent war has muddied the waters and deflected from important underlying questions. Link

Inflation never occurs when you play monopoly.

Inflation is the increase in the amount of money and credit causing advances in the price level. More cash chasing less.  If you didn't increase the cash/credit, while individual prices would rise, others would fall. i.e inflation would not occur.

and Robertson borrowing like a maniac.

You're a kindred soul 

I disagree, very low interest rates caused the asset bubble, higher interest rates will help fix the problem, lowering asset prices.  Our unemployment rate is too low, we need some slack in the system.  We have a wage price spiral occurring, not helped by Labour increasing the minimum wages, etc.  Our high inflation was not caused by just high oil prices and will not come down to the accepted range if oil prices drop, due to other factors.  Not that it seems likely oil will drop in price any time soon.   I seem to remember you saying, in previous posts, there is a historical correlation between oil prices and inflation.  Well I would say we are in uncharted waters and, in this case, history is not a good indicator of future performance.