China is at mounting risk of a Japanese-style "liquidity trap" as monetary policy loses traction and the economy approaches credit exhaustion, forcing a shift towards Keynesian fiscal stimulus.

Officials at the Chinese People’s Bank (PBOC) have begun to call for a fundamental change in strategy, warning that interest rate cuts have become an increasingly blunt tool. They cannot easily stop companies hoarding cash or halt the slide in private investment.

Sheng Songcheng, the PBOC’s head of analysis, set off a storm last month by warning that the economy had “started to show some signs of being caught in a liquidity trap.”

Caixin magazine said last week (8/16) Chinese companies are hoarding record sums of “dead money” rather than spending it. The growth rate of private investment has dropped to 2.1% over the last seven months, the lowest since global financial crisis. 

The International Monetary Fund warned in June that China’s corporate debt has reached 145% of GDP. “Vulnerabilities are still rising on a dangerous trajectory. They must be addressed immediately,” it said.  China’s entire financial system is clearly out of kilter.

Donald Trump has said publicly that he fears the next election will be rigged. Based both on technical capability and recent history, Trump’s concerns are not unfounded.

A recent study by Stanford University proved that Hillary Clinton’s campaign rigged the system to steal the nomination from Bernie Sanders.  What was done to Bernie Sanders in Wisconsin is stunning.

Why would the Clintons not cheat again? 

Democrat voter fraud has a long history.  The most prominent example is how it enabled John Kennedy to be President in 1960 instead of Richard Nixon.

Here’s how it happened back then with plain voter fraud.  It’s much easier now with rigged electronic voting machines.

Donald Trump has been issuing warnings about Democrat voter fraud in America this November.  If it’s anything like what we Brits are experiencing, you Yanks should listen to him.

If ever you’ve worried that parts of Britain now resemble some hideously corrupt, Third World Islamic basket case hell hole then you’re going to love Sir Eric Pickles’s gloriously robust report on electoral fraud.

His target, it’s clear, isn’t just the Moslem communities in places like London’s Tower Hamlets (and Birmingham and many Northern towns) which have imported to Britain the kind of political skullduggery and malpractice routine on the Indian subcontinent.

More broadly what Pickles is attacking is the bankrupt philosophy of Multiculturalism and the entrenched, institutional political correctness that have made it all possible.

It’s morally bankrupting Britain and Trump is warning it could bankrupt America.

To explain the present, the Communist Party of China (CPC) often turns to the past. One of its favorite pastimes is to deploy China’s decorated history and the wisdom of its ancients to explain its policies and bolster its authority.

For example, the CPC frequently offers the (largely nonviolent) 15th century maritime voyages of Zheng He, who projected Chinese power and carried Chinese treasure to destinations as far flung as the Middle East and Africa, to support the notion of its “peaceful rise” in the 21st century.

Mao was fond of quoting Sun Tzu, while today Xi Jinping keeps a rolodex of wise sayings from political philosophers at the ready.

Yet despite the homage paid to these leading lights, Beijing’s behavior is growing increasingly at odds with much of their counsel. That is to the detriment of China and the world.

Many of China’s most prominent ancient political philosophers, including Guan Zhong, Laozi, Confucius, Xunzi, and Mencius, held that governing with humane authority—“winning the hearts and minds of the people at home and abroad”—was the key to becoming a leading world power, as Yan Xuetong points out in his book Ancient Chinese Thought, Modern Chinese Power.

In terms of its foreign policy, China has been doing little of this lately.