Keynes Went Wrong In China Too
The country is drowning in unproductive investments financed with credit. The government spent 15% of GDP largely on public works projects in inland regions, financed with loans from the state-owned banks. Investment as a share of GDP soared to 48.5% in 2010, and the M2 measure of money supply ballooned to 140% that of the U.S. Now comes the hangover.
Worsening inflation forced the government to put on the brakes this year. As with most property busts, transactions dried up, followed by a free fall in prices. Land prices were down 60% year on year in September. Property developers are slashing prices of new homes to stave off bankruptcy.
Lord Keynes, are you listening? When you print huge amounts of borrowed fiat money, you get inflation, a boom, and the inevitable bust. Try to explain that to American economists like Paul Krugman, who thinks our stimulus wasn't "big enough".