TIMESTAMPS: 00:01:48 Why hasn't there been a credit crisis in China yet? 00:04:03 What's your framework for China? 00:08:00 Can you review capital controls & the dollar shortage? 00:15:04 What are the 3 scenarios for the Impossible Trinity? 00:18:34 Why won't China do another round of stimulus? 00:26:04 What's your near-term outlook for China? 00:33:01 How should investors position? 🔥 𝗚𝗘𝗧 𝟳 𝗗𝗔𝗬𝗦 of Real Vision Premium access & insights for only $𝟭 (seriously!) rvtv.io/RVfor1dollar
Real Vision Finance its US who has bigger money problem than China. China has trillions of cash stashed abroad and one of them is US treasury bills and earnings from investment around the globe. Do your research.
silent watcher Not true: China’s overseas monies are mostly government investments like in strategic minerals, ports and infrastructure, nothing that is liquid and easy enough to take back home. Japan, on the other hand, has more than enough private monies that can be repatriated home. The US is an entirely different animal: Almost all of the US’s debt are in USD, which the use has sovereign control over. The US can simply print money to redeem all its debt, which might cause hyperinflation, but is still within the realm of possibility.
steve crawford Brian McCarthy’s thesis is essentially the same as Kyle Bass’s, although I think Kyle Bass explains them more succinctly. I especially like Kyle Bass’ formulation of “look at the flows not the stock.” However, Brian McCarthy’s formulation (12:55) of “China increasingly having to bottle up its own investors in its own markets is ipso facto evidence that ..... those assets are overvalued ... US indices are pushing funds on top of that disequilibrium” Is quite powerful.
@steve crawford What if China & the other BRICS nations come out with a pooled shared digital asset/crypto stable coin which each country backs with their own gold or silver reserves? Thanks 🤗🏴🇬🇧
MELISSA kaffen Totally agree he is really on the ball the China buying up Ports, Corporations, Real Estate and the whole thing is ultimately a Ponzi Scheme which is what I always suspected.
He had a lot of maybe and probably IMO. 6000 years China has been around I doubt it will be an end of China. A down turn is likely no doubt but they have boosted their gold reserves to enormous levels and their reported gold reserves are likely much lower than their actual reserves. I am not convinced China will fall over but merely hit a few speed bumps and bounce back fairly quickly... The Australian Economy is really struggling already and gets worse by the day. I hope it's not our end but I would bet we will fall over big time before China and we will also take much longer to bounce back. We make nothing here now. Not even cars. The whole world economy is hurting and China will also feel it. Will they crumble and fall over as a Nation I would say not a chance.
@@protoplast.youtube I wouldn't hold your breath to be honest. You may want that but it certainly doesn't mean it will happen. I'll bet it doesn't in fact. I go to China a lot and I don't know the future by any means but I seriously doubt they will fall. They may have some problems yes but no worse than the rest of the world. I think most countries will be hurting in coming years and the west maybe the worst of the lot. Time will tell though not me and not this Guy either despite his knowledge China never show all their cards it's that simple. No one really knows what they actually have they can only really guess.
BAovm VVV . What is the basic economic model for a CONTROLLED economy? You do not believe there is an "invisible hand"? You believe the Fed controls the world? That might make your remark make some weird sense.
The bottom line is that China needs ever-increasing exports to get the dollars and euros (specifically) in because of the huge internal debt and the fact their currency is not internationally convertible. Who wants to be paid in RMB? It's OK to fob off the locals with RMB but China's huge import requirements need hard currency. So they are incredibly vulnerable to even the slightest downturn in exports due to tariffs. In any "trade war" China loses.
Love this comment. Only thing I would add is that the Chinese need these dollars as their economy appears to be substantially based on capital expenditure that is not commercial but that serves the party. Like the old communist thoery of digging holes and filing them back up again is job creation. Fine, but eventually you run out of money. If all their internal debt was invested on a commercial basis they would not have a perpetual shortage of dollars. But also communism and the CCP would not last.
@@uxpjsxu Even if they greatly expanded trade with Russia (which they are, like this new gas transmission project) are the Russians going to be paid in RMB? Not likely, they'll want dollars or euros because they're short of them too.
@@karlp8484 Here in Australia we have a massive dependence on China buying our iron ore, coal, tourism and coming here as students. I've just mentioned near on the entirety of our export economy believe it or not. The differnece between us and the Russians is they have very smart leadership. Our business and political leaders are so dumb, niave and greedy I actually believe, if facing a financial crisis, they would be dumb enough to allow trade in Yuan if the Chinese ran out of Dollars. Nonetheless I have an obsession with shorting the AUD in favor of USD. I am surprised this is not a more spoken of trade.
@@uxpjsxu I'm Australian too. We are wide open to a Chinese economic stall. I think we are already experiencing it. American investors would be wise to monitor the Australian economy because we'll be the first to go down the chutes if the Chinese economy starts to tank.
Excellent interview. Brian McCarthy is SO knowledgeable, insightful, and articulate. I learned a LOT. I'll surely look for more material from Real Vision Finance and Brian. Thank you so much for this video!
...and dilapidating as the months go by... after a year, you will know how it feels like to own apartments, no incoming cash flows, repairs to make and a dwindling investment portfolio value.
@@noelcollins2355 well you can always do as the rest of the world, who works and pays rent, meanwhile you have a place to live, a place for friends and family and still, your workforce and/or freetime
@@dam11232 Not everyone mate sorry... No one knows where it actually started or the first person to get it. It's speculation only. Not worth worrying about. The consequences of the pandemic for you would be the best efforts of your brain power.
Wow, this is a mind blower! I feel like I just got a PhD in economics. China has not had a true financial crash since they went capitalist 30 years ago. It will be fascinating to watch when it happens. One cannot lie about numbers forever. Math requires honesty and facing reality at some point. I wonder if it will take down the West banksters as well.
Bnei Bľanco your here worried about the future of China mate. Don’t come here trying to exhaust your worry. America brought China to the twenty first century. China is so great huh
Yes, don't trade with Commies. Trade with US and other countries which are likely to pay you in USD - a currency without any fiduciary backing. US just print as much money as they need. Cost?? Printing cost and paper cost. You part with products which you produced using your blood, sweat n tears. You will be using tangible products with tangible value to exchange for money printed on toilet papers. Go ahead and stop trading with the commies.
Beautiful presentation. Problems for China economy are real. Their ambition to become a global leader and China dream for 2025 is evaporated . Thank you for presenting a detailed program.
@@miguelangelgonzalez1831 There is no evidence for those claims, Only Falun Gong has made these claims and they haven't show concrete evidence of it happening whatsoever. Which massacre of prisoners? Show me your sources.
I hear they love World Bank...............and the annual loans they receive of 1.5 Billion per year. And they have a CCP person in a powerful position at the bank. How Nice.
I love this video. My uncle is a Mayer of a southeast China city, he already escaped to France because he knew the country is collapsing very soon. Some experts say China will break down in 2020 February.
US' economy is in a worst situation. The US Fed recently printed $75 billions out of thin air for banks because the banks don't have enough overnight liquidity.
Brian McCarthy: "The UK doesn't want something to grow that they cannot control" Virus: "Hold my beer". Brian McCarthy: "The US doesn't want something to grow that they cannot control" Virus: "Hold my beer".
PillCosby And a lot of rich/corrupt/powerful mainland Chinese individuals funnel capital in and out of Hong Kong, an open society that upholds democratic principles and the rule of law. In return, mainland China is encroaching on the liberties of HKers. Goes to show that the Chinese Communist Government has very little regard for the personal liberties of its own people.
@@JC-eh6ms "Little regard" your dimplomatic speech goes a universo away from the point, the filthy ccp must be taken down or our FREEDOMS will go down The drain, hombre!!!
I really wonder who is the one living under the well. Living inside CCP so long without interacting the outside world. The whole world sees China mostly in a very negative light.
@@francisjohnson2374 Yea, right!?! I burst out laughing and almost die! :D What I have learned in my decades of this life is that, *whatever people say is frequently a direct reflection of themselves.*
I am new to macroeconomy at this level, researching what might be happening in 2020 in the context of personal investment. I think I have understood about 50% of what Mr McCarthy was talking about but nevertheless I do love how precise and clear the guy is. Thanks for great clip
11:07: Interesting that HKMA(?) might be providing PRC’s SAFE with information on HK’s USD holdings. This could constitute an assault on HK SAR’s autonomy, probably sufficient to trigger a review under the US HK Democracy and Human Rights Act?
To be clear I have only anecdotal evidence of this. Not that it would surprise anyone in the least. Fertile ground for some enterprising reporter to do some digging...
This doesn't make sense. China is not short in $ at all. Actually, everyone pays China with $, China has so much trillions $ of cash flow so does not know what to do with. So China cant have liquidity problem. In fact, China buys US treasury bonds with this extra $, basiacly buys US's depth and invest money in safe capital, making economy more secured. This benefits both US and China. Nowadays China switches to buying gold because US $ can become unsafe, due conflicts with US and US's uncoming recession. China does not sell $ on foreign exchange in order to keep Yuan high, they tried but realized its waste and they don't bother to affect domestic currency inflation because China has benefit of weak currency which stimulates better export conditions for China. For past 20 years economists predict China's economy fails, but it just grows and grows, as well as China's infrastructures development and standard of living. US can learn a lot from China, in order to improve governing and efficiency. To make a fusion between old and new capitalism models. Would be mistake not to invest in China, because the system becomes more and more open and compliant with West and there are so many opportunities for high returns on investment and profits.
Fantastic analysis. "The numbers are getting really big. ... This whole policy structure of fighting this Impossible Trinity and stimulating every time that growth slows is at a dead end." 23:58 to 24:40
For the U.S. to sustain the ‘fiat’ value of the dollar, the confidence and continuous support of the world largest trading nation, China, is pre-eminent. In 1960, in current dollar value, U.S. GDP represented approximately 40% of global GDP U.S. However, by end 2019, America’s economic contribution is expected to be reduced to about 23%. The contrast is even more profound if measures in purchasing power parity, with U.S. economy making up 15% of the world GDP. By the same measurement, China GDP is now just over 19.2% of global GDP. Considering that in 1960, China GDP in nominal value of $60 billion was only 4.28% of the Global GDP of $1.4 trillion, the ascension of China in global stage is to say the least, amazing. It is a fact that the U.S. is enjoying massive advantage over the rest of the world. This is largely made possible because the world at large (and China) still honour the dollar as the principal reserve currency. The certitude of dollar as the reserve currency enables the U.S. to print money, via issuance of debts, to finance its insatiable appetite for consumption; and to augment the exploit and hegemony of capital. Effectively, to the U.S., the cost of capital and labour of other producing countries is no more than the cost of printing of the greenbacks.
@@marknordgard1916 The decoupling will be a long-term strategic move for the US, in my opinion, Trump just put more uncertainties in a short-term engagement, which will not change the course. I totally agree with the speaker on overrated Chinese assets and blown debt bubbles, I can't imagine the scale of the crisis once it is triggered from China. I do hope the Chinese government can prevent the fatal crash and release the tensions bit by bit. But that means they have to reinforce the centralized political control which will lead to more political pressure. I think the doable things are, to increase the social warefare spending massively like education, health system, cut the taxes for private sector, cut the fat government sector, to boost the domestic demand and give more freedom to the market. Unfortunately, they will not do such things because that harms their "core interest".
"If the largest trading nation in the world is centrally planed, you can not have them deeply integrated in to global trade and finance, and have a market economy globally" 30:43
I skipped ahead to 30:30 to see what you were highlighting.... Yup. The CCP is a power hungry beast. Just look at Xi, who removed term limits (which were put in place after the CCP saw how horrible Mao was), and who has injected his own words into the political rhetoric (instead of letting those after him do so...)
Don't hate the player. Hate the game. If you dont want a chance to lose, then dont play the game. Everyone needs to take responsibility for their actuons. Hopefully it remains civil and moral.
As with our own leadership hierarchy, those at the top are spokespeople, with dozens of lieutenants, with hundreds of bureaucrats with skills that are needed to drive the ship. Hopefully, they will steer clear of the rocks.
No place on earth can completely replace China. India has the most potential. But it lacks educated and trained workers (70% literate rate vs China's 98%, and that includes whoever can write their names in India). india also lacks a stable supply of energy, bad infrastructure...the list goes on. Vietnam is great, but it only has 100m people. There is very little it can do as an alternative of China. Plus Vietnam is a communist country. Other SE Asian countries are either well developed (Singapore, Thailand&Malaysia) or share the same issues as India (,Phillipines, Bangladesh, Cambodia etc)...it takes decades to build a supply chain. It is hard to replicate in other places. Decoupling means the end of decades of growth for everyone.
"As long as bad debt is limited to 1.5 to 2%" At this time, the NPL occupies more than 40% of total loans and its is growing very fast. The actual inflation rate in China is now far in excess of 35% and growing. I would suggest that one would be extremely wise to bail out of Chinese banks yesterday.
the irony is lost on those who would criticize China and not look at America who are doing the exact same things on a larger scale in the absence of industry.
nancy kurtz Technically there is, but “guanxi” (relationship) is much more emphasized and important in doing business, a custom that has been the product of the lack of rule of law throughout mainland China’s history.
There is 受信人 / 受託人 (literally translates as “the trustee” or “entrusted person”), but I don’t think the word carries the same weight as its English translation.
@S B Looks like Trump is willing to start a war with whoever doesn't surrender to his power. US is having a deflationary recession here, Hong Kong is only a card played by Trump imho.
China's economic success could not be fully explained by existing western economic theories because there was no other example in the world economic history. So trying to use western theories and practices to predict the direction of Chinese economy will simply fail no matter how elegant and how arrogant the arguments are. If this practice works, China's economy has been collapsed long, long time ago.
Is that simple ? Because the biased western medias never tell the truth about China ? And the fools never been to China believe it ?????? I heard these so many years .... But unfortunately no one can stop China to continue to grow !!!!!!!!
@@lwashington2947 the truth of China is that it pollutes the world more than any other country in the world, the economy is a paper tiger, the CCP is war posturing in the south China sea, and commiting atrocious human rights violations on Hong Kong. Imagine having dragged out of your apartment by "police" when you tweet something Winnie doesn't like. I saw that on cam, not the news, on cam. It really happened. Why do you think the wealthy Chinese move to California and New York? They want out of that rat hole you think is a great place. It is a blight on world democracy, peace and harmony. You have no argument, so don't bother.
Wow! This is incredible forensic economic analysis! I didn't even know or think this kind of information was available. Thank you so much. This makes me want to subscribe to your very aptly named "Real Vision" Finance.
Interesting view of how economics and geopolitics work out. It appears there might happen greater volatility in markets when central planning loses its grasp.. of global trade before system/"chain" will show it's true "face".
The interviewer and many commentators are shortsighted and not claim observers of China moves to solve it problems. China has and is taking moves to resolve its dependency on dollars for international trade: (1) Commodities: China is now buying commodities oil and iron ore in Yuan - Yuan futures dominated contracts in oil. Iran, Russia, Venezuela, Angola are selling oil in Yuan. Saudi Arabia is moving toward selling oil in Yuan. China is engaging in Resources- for- Infrastructures swap deals in Africa and South America- meaning they are locking in resources imports without the use of dollars to buy these resources. (2) Digital Yuan: with digital Yuan, China will be able to trade directly with countries using digital wallet and bypassing US dollar. By that I mean, a importer in Africa will not to to convert to US dollar to order from China. Rather, the importer can exchange Naira for Yuan in a digital wallet and buy goods in China.
"China is one of the biggest debt bubbles in the world" USA owes the amount equal to its GDP, meaning if no one in the US spends a single dollar and give all of it to the government for a whole year, they'd STILL be owing 6% of their GDP.
Does this video inadvertently explain how China's "accidental" release of SARS-COV-2 was so timed? Working through the numbers, might patient zero have been dated 20-30 Nov 2019?
Get over the blame game. Did we hear the GFC called the American Financial Crisis? The virus happened. The USA was unprepared and is suffering the consequences. End of story.
I've worked in China. It's National Socialist and ethno centric, with sub-sets of socialism in health-care, education, employment, food and housing. Chinese Culture is 4000 years old. It population is 1.3 trillion. The only bubble around is the one in Brain McCarthy's imagination.
so taxing Americans more for Chinese goods does that? LOL. You might wanna go back over Econ 101 facts to understand what you think you know better (because what you said doesn't make a lick of sense).
According to these figures, and with the current (CCP made) pandemic severely curtailing world economic activity (a slump per capita, possibly worse than the Great Depression) and massive shrinkage in consumer driven activity, particularly in tourism and hospitality globally, is going to have a huge negative economic impact on China. Western countries have registered very large increase in unemployment, which will have a flow-on effect with product demand shrinkage onto export-driven trade in China. The CCP politically and economically has backed itself into a corner.
when the current situation rolls through ,many countries will start acting in self interest, an unbalanced balance sheet will become unthinkable. the need for local production or trade with countries that reciprocate, may become a need just to survive? welcome to 2020
Only in response to tremendous pressure. "Working with allies" who are heavily financially conflicted (and largely free-riding on our military umbrella) is not nearly as easy as the globalists critics tend to suggest.
The guy is talking like the US is still the country which produces 50% of world GDP and holds 90% of global gold reserves. Sorry to wake you up but the dominance of US in world economy is fading and this process is irreversible.
@Tarzan reserve currency and currency used in international trade are not the same thing. Besides, the percentage of dollar is about 60% of global reserves and decreasing.
jjjmail I think you’re describing income inequality and conflating feudalism with capitalism. In a feudal system, lords and vassals are extensions of the monarch and pursuit of profit was not the goal. Capitalism then broke down and replaced feudalism so that employers could hire employees for the pursuit of profit. The employee can make demands from the employer (e.g. go on strike) and has the freedom to work for another (hopefully better) employer. That said, there are definitely parallels between the two systems. It seems like cooperatives are showing signs of reforming or even replacing capitalism.
that's what happens when you win a world war, you call the shots. Bretton woods and the US being a reserve currency... China can act tough, but they're playing the US's game.
stachowi not just that. It was also a matter of credibility. The US economy was the largest in the world after the war. The British pound that was the reserve currency before was no longer backed by a strong economy and a colonial empire. You can debate that today, as even the euro is a strong economy, but back then, the rest of the world was in crumbles, while the US mainland wasn't touched by a single bullet. All their industry was at maximum capacity, and the rest of the world needed manufactured goods to reconstruct. There was no conspiracy, that was the situation at the end of WW2...
Hi there americanos, salutations from the EU, so Trump 2020 & lets save freedom because if China gets really the hegemon we can kiss our DEMOCRACY goodbye, you americanos better keep thus your champion in the Oval Office. Best regards
Chinese when they buy property they can’t pass there will to there kids it goes to the regime as well when then die ,we pray that China 🇨🇳 gets there democracy but we remember what happened to those kids inTinemim Square ,we never forget may they Rest In Peace
fengkuang yu Or maybe it’s a foreign and maybe even a forbidden idea for someone who has never stepped out of mainland China and who is accustomed to internalizing state-run propaganda without questioning them.
Chinese wealth can easily be ruined by letting foreign manufacturing companies leave China as soon as possible. China mainly depends on exports of goods produced by foreign companies inside China.
TIMESTAMPS:
00:01:48 Why hasn't there been a credit crisis in China yet?
00:04:03 What's your framework for China?
00:08:00 Can you review capital controls & the dollar shortage?
00:15:04 What are the 3 scenarios for the Impossible Trinity?
00:18:34 Why won't China do another round of stimulus?
00:26:04 What's your near-term outlook for China?
00:33:01 How should investors position?
🔥 𝗚𝗘𝗧 𝟳 𝗗𝗔𝗬𝗦 of Real Vision Premium access & insights for only $𝟭 (seriously!) rvtv.io/RVfor1dollar
Real Vision Finance I
I prefer free.
@@greigsanderson broke lol
Real Vision Finance its US who has bigger money problem than China. China has trillions of cash stashed abroad and one of them is US treasury bills and earnings from investment around the globe. Do your research.
silent watcher
Not true: China’s overseas monies are mostly government investments like in strategic minerals, ports and infrastructure, nothing that is liquid and easy enough to take back home. Japan, on the other hand, has more than enough private monies that can be repatriated home.
The US is an entirely different animal: Almost all of the US’s debt are in USD, which the use has sovereign control over. The US can simply print money to redeem all its debt, which might cause hyperinflation, but is still within the realm of possibility.
A rolling loan gathers no loss .... Kyle Bass.
steve crawford
Brian McCarthy’s thesis is essentially the same as Kyle Bass’s, although I think Kyle Bass explains them more succinctly. I especially like Kyle Bass’ formulation of “look at the flows not the stock.” However, Brian McCarthy’s formulation (12:55) of “China increasingly having to bottle up its own investors in its own markets is ipso facto evidence that ..... those assets are overvalued ... US indices are pushing funds on top of that disequilibrium” Is quite powerful.
@steve crawford
What if China & the other BRICS nations come out with a pooled shared digital asset/crypto stable coin which each country backs with their own gold or silver reserves?
Thanks 🤗🏴🇬🇧
A rolling loan gathers the most loss
But China is a Country with two faces? The Government is a “red”, ( Communism ), and System is a
Capitalism, Greed and Profit, with Slavery&Workers!!!
This guy’s insight is blinding. Truly Fascinating to hear from him.
MELISSA kaffen Totally agree he is really on the ball the China buying up Ports, Corporations, Real Estate and the whole thing is ultimately a Ponzi Scheme which is what I always suspected.
This guy is just a China hater. So, his analysis makes no sense. Check the GDP & trading growth of China at the end of 2020.
Wow, this interview is before COVID19 got bad. One wonders what Mr. McCarthy's dire predictions would be now.
Obviously, Mr. McCarthy has a big bias against China. This is why his analysis makes no sense.
@@hotchi1566 if anything, with the trillions and trillions of dollar printing, no one will have Dollar Liquidity Crisis.
THIS GUY reallllly knows his stuff ✅👍🏻
Excellent! This guy has the most complete grasp of the big picture that I've heard about China!
He had a lot of maybe and probably IMO. 6000 years China has been around I doubt it will be an end of China. A down turn is likely no doubt but they have boosted their gold reserves to enormous levels and their reported gold reserves are likely much lower than their actual reserves. I am not convinced China will fall over but merely hit a few speed bumps and bounce back fairly quickly... The Australian Economy is really struggling already and gets worse by the day. I hope it's not our end but I would bet we will fall over big time before China and we will also take much longer to bounce back. We make nothing here now. Not even cars. The whole world economy is hurting and China will also feel it. Will they crumble and fall over as a Nation I would say not a chance.
N PG 🧐well the King Xi of China and his criminal dictatorship dynasty will hopefully fall (like the former dynasties)
@@protoplast.youtube I wouldn't hold your breath to be honest. You may want that but it certainly doesn't mean it will happen. I'll bet it doesn't in fact. I go to China a lot and I don't know the future by any means but I seriously doubt they will fall. They may have some problems yes but no worse than the rest of the world. I think most countries will be hurting in coming years and the west maybe the worst of the lot. Time will tell though not me and not this Guy either despite his knowledge China never show all their cards it's that simple. No one really knows what they actually have they can only really guess.
Many things can impress you easily when you’re uninformed.
Many Mani FPV 哈哈哈
Great analysis by Brian McCarthy!! I want to hear more from him.
really? its based on Mundell-Fleming Model.
its first year econ class material.
nothing wrong with basic analysis, but its still very basic.
BAovm VVV . What is the basic economic model for a CONTROLLED economy? You do not believe there is an "invisible hand"? You believe the Fed controls the world? That might make your remark make some weird sense.
The final economic results in 2020 show Brian McCarthy's model and analysis is totally wrong.
The bottom line is that China needs ever-increasing exports to get the dollars and euros (specifically) in because of the huge internal debt and the fact their currency is not internationally convertible. Who wants to be paid in RMB? It's OK to fob off the locals with RMB but China's huge import requirements need hard currency. So they are incredibly vulnerable to even the slightest downturn in exports due to tariffs. In any "trade war" China loses.
Love this comment. Only thing I would add is that the Chinese need these dollars as their economy appears to be substantially based on capital expenditure that is not commercial but that serves the party. Like the old communist thoery of digging holes and filing them back up again is job creation. Fine, but eventually you run out of money. If all their internal debt was invested on a commercial basis they would not have a perpetual shortage of dollars. But also communism and the CCP would not last.
@@uxpjsxu Even if they greatly expanded trade with Russia (which they are, like this new gas transmission project) are the Russians going to be paid in RMB? Not likely, they'll want dollars or euros because they're short of them too.
@@karlp8484 Here in Australia we have a massive dependence on China buying our iron ore, coal, tourism and coming here as students. I've just mentioned near on the entirety of our export economy believe it or not. The differnece between us and the Russians is they have very smart leadership. Our business and political leaders are so dumb, niave and greedy I actually believe, if facing a financial crisis, they would be dumb enough to allow trade in Yuan if the Chinese ran out of Dollars. Nonetheless I have an obsession with shorting the AUD in favor of USD. I am surprised this is not a more spoken of trade.
@@uxpjsxu I'm Australian too. We are wide open to a Chinese economic stall. I think we are already experiencing it. American investors would be wise to monitor the Australian economy because we'll be the first to go down the chutes if the Chinese economy starts to tank.
No wander Aussie
Excellent interview. Brian McCarthy is SO knowledgeable, insightful, and articulate. I learned a LOT. I'll surely look for more material from Real Vision Finance and Brian. Thank you so much for this video!
Wow. Looking back over the last 3 months, now mid March, he pretty much nailed everything!
I'm intrigued. I am no economist. Which parts has he properly predicted so far?
@@alessandroalafriz1955 watch the video. Everything he said about China came true
you would be crazy investing in china.
Yes correcto, financing this monster is madness
You will poor like others if you miss the China market.
PEACE& RESPECT okie dokie charlie chan
If you are in a position to make those decisions you won't be saying that.
Anyone can say that if they dont have responsibility of manging billion.
@@Chuanese 天安门大屠杀 1989
I like that concept of "being broke" but owning 6 or 7 apartments...
...and dilapidating as the months go by... after a year, you will know how it feels like to own apartments, no incoming cash flows, repairs to make and a dwindling investment portfolio value.
@@noelcollins2355 well you can always do as the rest of the world, who works and pays rent, meanwhile you have a place to live, a place for friends and family and still, your workforce and/or freetime
@Tarzan Yes it is, all structures require maintenance or it will collapse.
@@OtDawn specially the chinese one that after few years are crumbling
It's going to be very interesting to see what Chinese monetary policy looks like in the next 5 years.
Devon Rusinek it'll look like Kim Jong Un's
I am watching this video after coronavirus outbreak.
CCP Virus*** out break
@@dam11232 We're all sick of virus puns...
@@Reathety
It's not meant to be funny. It's what everyone is thinking.
@@dam11232 Not everyone mate sorry... No one knows where it actually started or the first person to get it. It's speculation only. Not worth worrying about. The consequences of the pandemic for you would be the best efforts of your brain power.
Its fake they aren't looking at those 5Gs towers that's killing everyone, global depopulation
Wow, this is a mind blower! I feel like I just got a PhD in economics. China has not had a true financial crash since they went capitalist 30 years ago. It will be fascinating to watch when it happens. One cannot lie about numbers forever. Math requires honesty and facing reality at some point. I wonder if it will take down the West banksters as well.
Keep watching n pay no attention to ur own American ponzi scheme that's swimming in debt..
Bnei Bľanco your here worried about the future of China mate. Don’t come here trying to exhaust your worry. America brought China to the twenty first century. China is so great huh
NO TRADE WITH COMMIES.
Its just like light trying to trade with darkness impossible.
Communist and capitalist.
King Miura we heard that since the iron curtain was erected n demolished. As a start, stop using Russian gas.
Get out of China... stop buying Chinese.. CCP will perish, Chinese people can begin to win..
Yes, don't trade with Commies. Trade with US and other countries which are likely to pay you in USD - a currency without any fiduciary backing. US just print as much money as they need. Cost?? Printing cost and paper cost. You part with products which you produced using your blood, sweat n tears. You will be using tangible products with tangible value to exchange for money printed on toilet papers. Go ahead and stop trading with the commies.
Beautiful presentation. Problems for China economy are real. Their ambition to become a global leader and China dream for 2025 is evaporated . Thank you for presenting a detailed program.
I love your work! Keep it up!
Ponzi dynamic is right!
Investing in China is great until you try to get your $ returns out.
Alorand just spend them in china
Shure, yes, it is great to finance the human organs trade, the masacre of prisioners ( for theyr religious or political beliefs ).
@StrategicFooyoo at least u get your money. Freedom ain't cheap u know
@@miguelangelgonzalez1831 There is no evidence for those claims, Only Falun Gong has made these claims and they haven't show concrete evidence of it happening whatsoever. Which massacre of prisoners? Show me your sources.
San Daz You can also do some research on the topic yourself.
Oh wait, you can’t do that in mainland China. Nevermind.
I hear they love World Bank...............and the annual loans they receive of 1.5 Billion per year. And they have a CCP person in a powerful position at the bank. How Nice.
Do you think 1.5 billion is a big number to China? It’s a drop in the water. China owns 1.4 trillion US debt. What’s 1.5 billion compare to that?
The thing is China and the CCP are apparently taking over World Bank.
The world bank was created mainly for developing nations, they don't garner so much power.
That seems very true and how are you doing?@ Ron Cernokur
I love this video. My uncle is a Mayer of a southeast China city, he already escaped to France because he knew the country is collapsing very soon. Some experts say China will break down in 2020 February.
- X No offense to you or your uncle, but I hope so
@@White_Recluse Haha, You are the first idiot attracted by my fabricated story ~~~ ^_^
HAPPY Xrismas ~~~
This is so exciting, seeing China collapsed and communism is done.
@@ilham1634 my friend, don't touch food with right hand
Absolutely amazing and insightful informative. 🙏🏻
This is like watching The Big Short in 2006.
Spot on 👍
Yeah... Bt I believe you may have it backward. It's the Dollar that you should short, sadly.
@@taylorj6177 take another sip from your Luckin Coffee ;)
US' economy is in a worst situation. The US Fed recently printed $75 billions out of thin air for banks because the banks don't have enough overnight liquidity.
1:15
Brian McCarthy: "China doesn't want something to grow that they cannot control"
CCPVirus: "Hold my beer".
Freedom virus:“hold you people”
@@user-gd9pb5ek7j Nah, we'll leave that to your lot since you do it so well. :)
Brian McCarthy: "The UK doesn't want something to grow that they cannot control"
Virus: "Hold my beer".
Brian McCarthy: "The US doesn't want something to grow that they cannot control"
Virus: "Hold my beer".
This gentleman speaks the truth that China should pay attention to!
China: This “ponzi dynamic”, tell me more...
Ponzi dynamic is right! It's an open secret that investing in China is great until you try to get your US $ returns out.
China has to launder money out to get it into US dollars. See: Biden's.
PillCosby And a lot of rich/corrupt/powerful mainland Chinese individuals funnel capital in and out of Hong Kong, an open society that upholds democratic principles and the rule of law. In return, mainland China is encroaching on the liberties of HKers. Goes to show that the Chinese Communist Government has very little regard for the personal liberties of its own people.
If you want take your money out, you will face difficulties.
@@JC-eh6ms "Little regard" your dimplomatic speech goes a universo away from the point, the filthy ccp must be taken down or our FREEDOMS will go down
The drain, hombre!!!
Open your eyes to check what's really going on there...
Yes...China is an evil tyranny
@@davidbagley1783 井底之蛙，来中国看看。
I really wonder who is the one living under the well. Living inside CCP so long without interacting the outside world. The whole world sees China mostly in a very negative light.
@@francisjohnson2374 你这个人真奇怪，中国伤害过你吗？你有什么资格指手画脚？有什么资格批判她？你对一个国家或地区不了解的时候请不要妄加评判。不要什么事都是你们认为怎样就怎样。欢迎你来中国看看。我们不批判你们的国家和文化，也请你们尊重我们。
@@francisjohnson2374
Yea, right!?! I burst out laughing and almost die! :D
What I have learned in my decades of this life is that, *whatever people say is frequently a direct reflection of themselves.*
I am new to macroeconomy at this level, researching what might be happening in 2020 in the context of personal investment. I think I have understood about 50% of what Mr McCarthy was talking about but nevertheless I do love how precise and clear the guy is.
Thanks for great clip
Nomadic, new to Macro. Go to Hedgeye, those guys look at macro from a rate of change prospective that works. Though not perfect.
11:07: Interesting that HKMA(?) might be providing PRC’s SAFE with information on HK’s USD holdings. This could constitute an assault on HK SAR’s autonomy, probably sufficient to trigger a review under the US HK Democracy and Human Rights Act?
To be clear I have only anecdotal evidence of this. Not that it would surprise anyone in the least. Fertile ground for some enterprising reporter to do some digging...
I’ve heard a lot but this is by far the best information I’m listening to everything you and he post from now on.
This doesn't make sense. China is not short in $ at all. Actually, everyone pays China with $, China has so much trillions $ of cash flow so does not know what to do with. So China cant have liquidity problem. In fact, China buys US treasury bonds with this extra $, basiacly buys US's depth and invest money in safe capital, making economy more secured. This benefits both US and China. Nowadays China switches to buying gold because US $ can become unsafe, due conflicts with US and US's uncoming recession. China does not sell $ on foreign exchange in order to keep Yuan high, they tried but realized its waste and they don't bother to affect domestic currency inflation because China has benefit of weak currency which stimulates better export conditions for China. For past 20 years economists predict China's economy fails, but it just grows and grows, as well as China's infrastructures development and standard of living. US can learn a lot from China, in order to improve governing and efficiency. To make a fusion between old and new capitalism models. Would be mistake not to invest in China, because the system becomes more and more open and compliant with West and there are so many opportunities for high returns on investment and profits.
Spot on
Fantastic analysis.
"The numbers are getting really big. ... This whole policy structure of fighting this Impossible Trinity and stimulating every time that growth slows is at a dead end." 23:58 to 24:40
For the U.S. to sustain the ‘fiat’ value of the dollar, the confidence and continuous support of the world largest trading nation, China, is pre-eminent.
In 1960, in current dollar value, U.S. GDP represented approximately 40% of global GDP U.S. However, by end 2019, America’s economic contribution is expected to be reduced to about 23%. The contrast is even more profound if measures in purchasing power parity, with U.S. economy making up 15% of the world GDP. By the same measurement, China GDP is now just over 19.2% of global GDP.
Considering that in 1960, China GDP in nominal value of $60 billion was only 4.28% of the Global GDP of $1.4 trillion, the ascension of China in global stage is to say the least, amazing.
It is a fact that the U.S. is enjoying massive advantage over the rest of the world. This is largely made possible because the world at large (and China) still honour the dollar as the principal reserve currency. The certitude of dollar as the reserve currency enables the U.S. to print money, via issuance of debts, to finance its insatiable appetite for consumption; and to augment the exploit and hegemony of capital. Effectively, to the U.S., the cost of capital and labour of other producing countries is no more than the cost of printing of the greenbacks.
Exactly. Dollar will strengthen due to liquidity crisis before it then ends as the world reserve currency.
Trump is going to delay the tariff before 15th, that is my bet. I will long gold if the news was released.
Bloomberg and WSJ talking about an unknown person who know that trade war whit Cina will stopp soon
@@marknordgard1916 The decoupling will be a long-term strategic move for the US, in my opinion, Trump just put more uncertainties in a short-term engagement, which will not change the course. I totally agree with the speaker on overrated Chinese assets and blown debt bubbles, I can't imagine the scale of the crisis once it is triggered from China. I do hope the Chinese government can prevent the fatal crash and release the tensions bit by bit. But that means they have to reinforce the centralized political control which will lead to more political pressure. I think the doable things are, to increase the social warefare spending massively like education, health system, cut the taxes for private sector, cut the fat government sector, to boost the domestic demand and give more freedom to the market. Unfortunately, they will not do such things because that harms their "core interest".
@@xinzhang6241 减税的话 会释放更多流动性，流动性在低工资低物价的环境下，自然而然都会集中到上层。
@@user-rh2pv2kc5g 其实谈这些没有任何意义，政治上无法做出根本性的变革就没有改变经济行为的基础。中国本来就应该建成大政府，高社会保障的均富社会，否则往左走，就是集权国家资本主义，往右走，就是大企业垄断资本主义。
@@xinzhang6241 兄弟说的是实话。现在是大政府，只是均富社会机制还没有，好在国家经济体量还在。不过stimulus只会跟上面那个兄弟说的，往上走。
"If the largest trading nation in the world is centrally planed, you can not have them deeply integrated in to global trade and finance, and have a market economy globally" 30:43
I skipped ahead to 30:30 to see what you were highlighting.... Yup.
The CCP is a power hungry beast. Just look at Xi, who removed term limits (which were put in place after the CCP saw how horrible Mao was), and who has injected his own words into the political rhetoric (instead of letting those after him do so...)
Don't hate the player. Hate the game. If you dont want a chance to lose, then dont play the game. Everyone needs to take responsibility for their actuons. Hopefully it remains civil and moral.
As with our own leadership hierarchy, those at the top are spokespeople, with dozens of lieutenants, with hundreds of bureaucrats with skills that are needed to drive the ship. Hopefully, they will steer clear of the rocks.
Why doesn't he address the gold backed crypto China and Russia are working on?
you can only bet on what is tried and proven. Going for wonder weapons is lofty thinking.
get ready! cryptos are a C!A creation ... feel all warm a fuzzy now?
Lol was that a joke?
probably because international settlements mostly use dollars and euros today
gold and cryptos are not systemically important for now
Yea the country that can sell organs of thier citizens want them to have sound money. 😂😂😂
A great point, the Japan model, made in America. Japan acts like an ally, China does not. Move your supply chains home, or to Vietnam.
No place on earth can completely replace China. India has the most potential. But it lacks educated and trained workers (70% literate rate vs China's 98%, and that includes whoever can write their names in India). india also lacks a stable supply of energy, bad infrastructure...the list goes on. Vietnam is great, but it only has 100m people. There is very little it can do as an alternative of China. Plus Vietnam is a communist country. Other SE Asian countries are either well developed (Singapore, Thailand&Malaysia) or share the same issues as India (,Phillipines, Bangladesh, Cambodia etc)...it takes decades to build a supply chain. It is hard to replicate in other places. Decoupling means the end of decades of growth for everyone.
"As long as bad debt is limited to 1.5 to 2%" At this time, the NPL occupies more than 40% of total loans and its is growing very fast. The actual inflation rate in China is now far in excess of 35% and growing. I would suggest that one would be extremely wise to bail out of Chinese banks yesterday.
the irony is lost on those who would criticize China and not look at America who are doing the exact same things on a larger scale in the absence of industry.
China MUST PAY REPARATIONS.
they wont, their economy would collapse totally
Ya...I’m not sure there is a word in mandarin for fiduciary....
nancy kurtz Technically there is, but “guanxi” (relationship) is much more emphasized and important in doing business, a custom that has been the product of the lack of rule of law throughout mainland China’s history.
There is 受信人 / 受託人 (literally translates as “the trustee” or “entrusted person”), but I don’t think the word carries the same weight as its English translation.
bla blahblah There may be a mistake but I’m pretty sure a trustee is a fiduciary. Trustors are not a fiduciary.
bla blahblah also the trustee manages for the trustor. Think you may have it the other way round or I am reading your comment wrong.
fantastic video. thanks for sharing RVF.
very insightful.
thanks for sharing the conversation with brian.
We need an update on this conversation as of June 1, 2020. Lots has changed. Please?
@S B Looks like Trump is willing to start a war with whoever doesn't surrender to his power. US is having a deflationary recession here, Hong Kong is only a card played by Trump imho.
"... when the shadow bankings are no longer working for CCP... it's done with PRC and PLA...
... by then cash is king again...!"
EUDS
Hater's imagination
China's economic success could not be fully explained by existing western economic theories because there was no other example in the world economic history. So trying to use western theories and practices to predict the direction of Chinese economy will simply fail no matter how elegant and how arrogant the arguments are. If this practice works, China's economy has been collapsed long, long time ago.
Great channel, so refreshing hearing someone who knows what they are talking about regarding China. So much disinformation out there.
Pride goes before destruction....
Pride destroy everything...
That was awesome. Thanks
8:47 I think i experienced that... my desired outflow being restricted by inflows.
Haha!
what an informative visitor, thanks Brian McCarthy
tremendous depth here very solid
Just like Winnie the Pooh, no concept of what happens after the honey runs out.
Is that simple ? Because the biased western medias never tell the truth about China ? And the fools never been to China believe it ?????? I heard these so many years .... But unfortunately no one can stop China to continue to grow !!!!!!!!
@@lwashington2947 the truth of China is that it pollutes the world more than any other country in the world, the economy is a paper tiger, the CCP is war posturing in the south China sea, and commiting atrocious human rights violations on Hong Kong. Imagine having dragged out of your apartment by "police" when you tweet something Winnie doesn't like. I saw that on cam, not the news, on cam. It really happened. Why do you think the wealthy Chinese move to California and New York? They want out of that rat hole you think is a great place. It is a blight on world democracy, peace and harmony. You have no argument, so don't bother.
@@lwashington2947 unfortunately it stopped now. Because of xinnie the pooh
Well, this is depressing...Thanks. Why am I watching this on a Sunday morning?
Wow! This is incredible forensic economic analysis! I didn't even know or think this kind of information was available. Thank you so much. This makes me want to subscribe to your very aptly named "Real Vision" Finance.
30:14 Lol I think this guy might be a fortune teller, President Trump rolled back Hong Kongs special status this week!!!!
Interesting view of how economics and geopolitics work out. It appears there might happen greater volatility in markets when central planning loses its grasp.. of global trade before system/"chain" will show it's true "face".
The interviewer and many commentators are shortsighted and not claim observers of China moves to solve it problems. China has and is taking moves to resolve its dependency on dollars for international trade: (1) Commodities: China is now buying commodities oil and iron ore in Yuan - Yuan futures dominated contracts in oil. Iran, Russia, Venezuela, Angola are selling oil in Yuan. Saudi Arabia is moving toward selling oil in Yuan. China is engaging in Resources- for- Infrastructures swap deals in Africa and South America- meaning they are locking in resources imports without the use of dollars to buy these resources. (2) Digital Yuan: with digital Yuan, China will be able to trade directly with countries using digital wallet and bypassing US dollar. By that I mean, a importer in Africa will not to to convert to US dollar to order from China. Rather, the importer can exchange Naira for Yuan in a digital wallet and buy goods in China.
"China is one of the biggest debt bubbles in the world"
USA owes the amount equal to its GDP,
meaning if no one in the US spends a single dollar and give all of it to the government for a whole year, they'd STILL be owing 6% of their GDP.
Does this video inadvertently explain how China's "accidental" release of SARS-COV-2 was so timed? Working through the numbers, might patient zero have been dated 20-30 Nov 2019?
Get over the blame game. Did we hear the GFC called the American Financial Crisis? The virus happened. The USA was unprepared and is suffering the consequences. End of story.
@@amraceway Hello CCP Bot
Xi Jin Pi seems to be winning and all hope seems lost...when all of a sudden:
*Portals open*
Pixsm. Mm
People
It would be great to hear a follow up of this conversation post-covid
This 🇺🇸🇺🇸Guy is so smart
great interview! thx
Thanks Jim!
The roll back on tariffs was just announced.
I've worked in China. It's National Socialist and ethno centric, with sub-sets of socialism in health-care, education, employment, food and housing. Chinese Culture is 4000 years old. It population is 1.3 trillion. The only bubble around is the one in Brain McCarthy's imagination.
This guy know real stuff
Buy the dip. Buy American. 👁🤙🏻
When the Titanic (CHINA) is SINKING. TIME to get into to a LIFEBOAT (PULL ALL DOLLARS & FACTORIES OUT).
Hopefully there are enough life boats this time. ;)
So, institutions pay for this advice and you're broadcasting it for free??? Why?
I love it! I have watch several of your videos and think you are on track with whats been going on.
"China is one of biggest debt bubbles in the world". What are the others?
Ron Arts it owes 1 trillion dollar
Really hope the tariffs on China increase this weekend, need to pop their bad loan bubble.
Yes Señor Walken, Drumpf should give em the 100% Christmas gift
so taxing Americans more for Chinese goods does that? LOL. You might wanna go back over Econ 101 facts to understand what you think you know better (because what you said doesn't make a lick of sense).
Agreed, we need more tariffs on Chinese goods
@@buckeyeman7631 Yes... so many are still clueless about how tariffs work. Just blindly believe in their leaders. Lol
According to these figures, and with the current (CCP made) pandemic severely curtailing world economic activity (a slump per capita, possibly worse than the Great Depression) and massive shrinkage in consumer driven activity, particularly in tourism and hospitality globally, is going to have a huge negative economic impact on China. Western countries have registered very large increase in unemployment, which will have a flow-on effect with product demand shrinkage onto export-driven trade in China. The CCP politically and economically has backed itself into a corner.
Agreed, let's hope it doesn't lash out on the way down...
I am not an economy guy... There needs to be a layman summary of china in the next decade for us not so smart people.
when the current situation rolls through ,many countries will start acting in self interest, an unbalanced balance sheet will become unthinkable. the need for local production or trade with countries that reciprocate, may become a need just to survive? welcome to 2020
To be fair China is learning from the best.
31:30 EU is not going to decouple from china in light of the difficulty the US has had in convincing them to decouple from Iran.
Only in response to tremendous pressure. "Working with allies" who are heavily financially conflicted (and largely free-riding on our military umbrella) is not nearly as easy as the globalists critics tend to suggest.
The guy is talking like the US is still the country which produces 50% of world GDP and holds 90% of global gold reserves. Sorry to wake you up but the dominance of US in world economy is fading and this process is irreversible.
@Tarzan reserve currency and currency used in international trade are not the same thing. Besides, the percentage of dollar is about 60% of global reserves and decreasing.
China is working their feudal economy 😂😂😂
PAW PALS -just like us Americans....
JEiowan How? Please explain.
And most of the chinese are under the influence of "XI JINPING THOUGHT" and the "CHINESE DREAM" & still getting high on worshipping the CCP
jjjmail I think you’re describing income inequality and conflating feudalism with capitalism. In a feudal system, lords and vassals are extensions of the monarch and pursuit of profit was not the goal. Capitalism then broke down and replaced feudalism so that employers could hire employees for the pursuit of profit. The employee can make demands from the employer (e.g. go on strike) and has the freedom to work for another (hopefully better) employer.
That said, there are definitely parallels between the two systems. It seems like cooperatives are showing signs of reforming or even replacing capitalism.
@@mattherrera711 sounds like the American dream. Getting high on the dollar.
Give me more Euro dollars or your banking system will crumble!
that's what happens when you win a world war, you call the shots. Bretton woods and the US being a reserve currency... China can act tough, but they're playing the US's game.
stachowi not just that.
It was also a matter of credibility. The US economy was the largest in the world after the war. The British pound that was the reserve currency before was no longer backed by a strong economy and a colonial empire.
You can debate that today, as even the euro is a strong economy, but back then, the rest of the world was in crumbles, while the US mainland wasn't touched by a single bullet. All their industry was at maximum capacity, and the rest of the world needed manufactured goods to reconstruct.
There was no conspiracy, that was the situation at the end of WW2...
never more prescient than right now amidst the pandemic. This post should age very well.
I am trying to understand China,... from China...
Excellent Video thank you.
Hi there americanos, salutations from the EU, so Trump 2020 & lets save freedom because if China gets really the hegemon we can kiss our DEMOCRACY goodbye, you americanos better keep thus your champion in the Oval Office.
Best regards
We love him.
If countries keep doing business with China, you just keep helping them.
Chinese when they buy property they can’t pass there will to there kids it goes to the regime as well when then die ,we pray that China 🇨🇳 gets there democracy but we remember what happened to those kids inTinemim Square ,we never forget may they Rest In Peace
Lorry Camill You sound so ignorant. My parents passed away and my sister inherited their apartment in central BJ.
I am more dumber after this video
Well done! I wouldn't have though it possible for someone who uses the phrase "more dumber" to become so.
Yeah, statement like this fit well for someone’s taste!
fengkuang yu Exactly. It fits well for someone who can think critically and independently.
J C Yes, fit well for those who think crazily but never have been to China to look at it with his own eyes!
fengkuang yu Or maybe it’s a foreign and maybe even a forbidden idea for someone who has never stepped out of mainland China and who is accustomed to internalizing state-run propaganda without questioning them.
why cant this guy do more to help western countries fix the problem instead of just explaining it
Chinese wealth can easily be ruined by letting foreign manufacturing companies leave China as soon as possible. China mainly depends on exports of goods produced by foreign companies inside China.
This man is a brainiac...impressive.
All roads lead to gold.
This was filmed Nov. 13, 2019. China had big problems. What happens in 2020? Virus.
Brian McCarthy is great. Love your commentary. Keep it comming