I see reports that NGDP growth in China is falling sharply. What would a market monetarist expect to result from this sort of monetary policy?

Freepik

Pretty much exactly what has happened:

1. High unemployment
2. Financial distress
 

There are two ways to think about this issue:

1. Focus on the skinny dippers (dumb borrowers)
2. Focus on why the tide went out (monetary policy)

I’d guess that 99% of pundits focus on the first, while market monetarists focus on the second. (Both are valid concerns.)

PS. For those who don’t know, I’m referring to Warren Buffett’s famous remark:

You only find out who is swimming naked when the tide goes out.

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