Ultra-low, and in some cases negative, interest rates have done many weird and not-so-wonderful things, including giving the Chinese a leg up in the US public transit market. From MN Gordon at economicprism.com:
One of the more remarkable achievements of fake money creation is that it distorts and disfigures the world in odd and uncanny ways. Dow (not quite) 27,000. Million dollar shacks. Over $13 trillion in subzero-yielding debt.
You name it. Any and every disfiguration is possible with enough fake money.
However, when it comes to the full range of ways fake money distorts the economic landscape, asset price inflation is merely a cheap facade. The real, mega disfigurations pile up in the arena of international trade. What’s more, they extend well beyond a gaping trade imbalance.
Currency wars, competitive devaluations, and the race to the bottom are all hazards formed out of the confluence of fake money, foreign exchange markets, and international trade. So, too, the impetus for tit for tat trade tariffs and trade wars ties back to the deceit and deception of fake money. Still, these facets aren’t the half of it.
To better understand what exactly fake money has wrought, a brief detour is in order. You see, a world under the influence of fake money is a strange and curious place. The clearest path between two points is not always a straight line.
Thus, before we get to how Beijing is using fake money to cannibalize the U.S. transit market, we deviate to the fake capitalism of the technology sector. This may be an old and tired story. But it offers important context for understanding the world at large…
