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Fascinating topic and, as always, a wonderful and enthralling analysis, Peter!

‘Monetary policy Catch-22’ says it in a nutshell for China. I would expect that now the only course of action open to the CCP is to somehow ‘force’ Chinese citizens to buy real estate. Something along the lines of ‘If you want to keep your job, you must show proof of having bought a home’, or ‘if you want a place to live, you must purchase it (even if that destroys your financial future)’. Such draconian measures will only increase the desire of citizens to get themselves and their funds out of the country, but maybe it will also be the last straw on the camel’s back of their frustration. What do you think, Peter - is there some less authoritarian financial pathway that the CCP would attempt first?

As for the US, I’ll bet the Fed will just muddle through, trying to minimize their damage, until the Election is over. After that, the consequences will catch up with us, but will be blamed on the new administration. If the current Democratic administration thinks Trump really is going to win, they have incentive to make the economy look good until November, then thoroughly let it tank after that, so that the Democrats can get back into power four years later. (And this is the political game played decade after decade, to our detriment.)

What I’m wondering, is if China very rapidly declines between now and November, with its foreign investment and citizens’ capital continuing to leave and much of it being reinvested in the U.S., how much of that reallocation will help us? Would it be substantial enough to offset the damage caused to global economies from China’s meltdown? (Probably nowhere near enough.) Any thoughts on the near-term chain of economic events, and it’s effect on our Election?

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