今年中国货币发行量下降到9年低点，通常每年增17.5%,今年只长了15%。15%是多少呢？下面2011年的M2减2010年的M2，正好10万亿。可见地方政府债务在计划经济的计划内。

Chinese M2 increased from RMB 66.3 trillion in May, 2010 to RMB 76.3 trillion in May, 2011, or 15% annually.

I got back to China four days ago, and from a few observations, I can see that this new money is flowing mostly into housing. I went down to the convenience store yesterday, and the price of a large bottle of water and a cup of yogurt are the same as they were two years ago, when I first came to China. Meaning that the increase in the money supply is not being reflected in basic consumer goods.

Housing prices are another story. A friend of mine told me that when she went to meet the new people that had moved in above her, she found out they had paid double what she had paid two years ago. (And this was on the fifth floor of a building with no elevator.)

Another friend’s house has increased four times over the 2005 purchase price. That is much higher than that the 160% increase in China’s currency over that time. I believe China will most likely experience what the U.S. is going through in that housing prices crash while the price of every day goods continue to rise.