PBOC Raises Reserve Requirements Again

China's central bank raised the reserve requirement by 50 basis points on Wednesday, effective January 25. The new reserve requirement will be 15% once the change takes effect.

This graph is from an article by Frank Shostak on the U.S. economy: Will the U.S. economy suffer a downturn?
We suggest that sooner or later the persistent tightening will burst the bubble and plunge China’s economy into an economic downturn. The burst of China’s bubble activities can happen at any time. This in turn could disrupt the flow of real savings to the US. Now if we were to assume that China’s bubble activities may hold for another year then a serious economic downturn in the US and the rest of the world is likely to take place during 2009.

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