Mish has some numbers on the scale of the Chinese debt Ponzi.

Just yesterday I posted about the massive debt Ponzi that China is running and why I thought they were doing it.  Early this morning, Mish also posted on same but he added some numbers that I think are eye opening.  If you don't think the world is headed for huge trouble, read this and get your wake up call.

If you read that, perhaps you caught the use of the term "wave" being used.  The US banking system crash in 2008 was just wave 1.  The China (Debt Ponzi) Syndrome will be wave 3.  3rd waves are never the weakest and usually the strongest.  This could easily result in massive global contagion.  I guess all of this malinvestment is why you can buy Chinese electronics for 25% of what others are selling theirs for.  When China crashes, prices could spike even lower as we clear out all of the excess inventory of bankrupted Chinese hardware manufacturers.  But after that, those low prices will likely evaporate right along with the massive, debt-driven oversupply of cheap manufacturing.  Why so cheap?  Because they financed it, man.  It's always cheaper to produce something when you never intended to pay off the equipment that you bought on credit!!

But once that goes bust it will not come back.  That is when Americans will go from deflation to massive inflation.  When our supply of debt slaves in China dries up, then Americans are going to have to manufacture our own stuff and if there is any human labor involved the prices will be sky high.  Let's hope factory automation takes a huge step up in the mean time!