More proof of the Chinese myth, largest and emptiest mall in the world.

Previously we looked at the Chinese currency and discussed the possibility that a majority who believe the Yuan is undervalued may be wrong.  Indeed the idea that the Yuan is actually overvalued given the rampant inflation is far more logical.  We will see a tremendous slowdown in what was largely fake growth coming out of China, growth that was primarily fueled by a central government directive and has no economic basis what so ever.  

You may have heard of China's ghost cities, entire cities built for the sake of building that stand largely unoccupied with investors holding on to properties as a means to protect themselves from inflation.   What you may not have heard of, is China's ghost mall.  This happens to be the biggest shopping center in the world too a label the Chinese owners announce with pride, but it is also the emptiest.  PBS ran a story, the video can be found here.  

The mall, called the South China Mall was constructed in 2005 and most of the retail space is still empty!  Those shop keepers that do own stores can go days without making a single sale.  The population in the area consists primarily of factory workers who simply do not have the capital to consume the goods offered in the mall, at least from those shop keepers with favorable leases.  What is so striking about this empty mall is that there is no demand for goods.  As you may know of course, Americans place a large emphasis on consumer ability and cheer every time Americans purchase more junk during the holiday season than the previous year.  If indeed retail power is an indication of economic strength, then China's empty mall is a blatant sign of weakness.  

Because the Chinese Government was busy pumping more and more money into the economy the result was simply an enormous construction bubble.   Massive cities and malls were constructed, but not because there was any tangible demand, but because investors just could.  Now all the printing has created food inflation prices that have crushed the fledgling middle class in China resulting in virtually no expendable income what so ever.  This will invariably have the same effect as the Spanish ghost towns, where the depreciating asset known as property, begins to break down due to lack of use.   What was once a plausible investment will simply turn into a pile of useless of rubble!  This is money that nobody will ever get back and see again, but plenty of people will suffer in the process.  

The evils of inflation in less stable economies are much more apparent than they are here in America.  China is forced to tighten, Bangladesh stock market has crashed (biggest crash in 55 years) causing riots and Tunisia's death count is mounting as people take to the streets to combat runaway inflation. Egypt and Algeria are bracing themselves as food inflation invades their countries.  There are also massive price increases in areas of India and Pakistan that is causing immense hardship to the working classes.  Yet there is one simple explanation behind all of these seemingly unrelated events.  Monopoly on paper money.

Governments and central banks are once again demonstrating the power of money and how much damage can be done to a society when the power of money is not only monopolized, but whose value has been systematically removed through the power of fiat.