Government Stimulus is Inflationary

Government stimulus will push up M2 and M2 will push up inflation.

The PCE, which is a broader measure of the CPI clearly indicates that inflation is going to hit.

China Acts: 1 trillion yuan stimulus on Infrastructure

China has acted with a big infrastructure stimulus plan of 1 trillion yuan. This is equivalent to 160 billion dollars. With GDP of China being half of that of the U.S., this means it is equivalent to a 320 billion dollar stimulus in the U.S. This is a pretty big stimulus if you tell me.

You know what that means. Buy commodities and stocks.

http://www.businessinsider.com/chinese-market-goes-wild-after-1-trillion-yuan-stimulus-plan-2012-9

The Status on China

We already know China is slowing down, because their imports of key commodities have been going down lately. I summarized this already in this article. We saw that industrial commodity imports were declining, while gold imports and U.S. treasury buying skyrocketed. I believe China has enough tools to keep their real estate and stock markets from falling. To find out how, go to my analysis here.