The root of the problem

The PboC has reported almost a 2X increase in the money supply (M1). At first glance it looks like they’re printing money like there is no tomorrow, but it appears that they have changed the calculation methodology that, once ajusted to mimic western standards, happens to almost double M1 from the prior calculation methodology. Coincidentally, Japan just published its inflation report (CPI 4%), and for the first time in decades, Japan has a higher inflation rate than the US. Inflation is making a comeback, and so far, without pressures from the energy sector, where oil prices have been in a comfortable range for producers. The equity market is expensive, but in an rising prices environment, it’s one decent way to protect portfolios from loss of purchasing power. At the root of the problem: too much debt, too much spending and money printing.

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