Booms and busts fueled by cheap credit are incredibly disruptive. What’s more, they’re exacerbated by central bank efforts to smooth out the business cycle.  Rather than rounding the peaks and tapering the bottoms, monetary policy, as currently executed, has the unfavorable effect of magnifying them.  There’s an abundance of fresh examples.

One of the more accentuating illustrations of recent years is China’s mass concrete binge.  Pumping credit to stimulate construction in China has had the ill-effect of compelling the country to do something extraordinarily incredible.  In short, they’ve mixed up massive amounts of concrete and splattered it across the landscape.

Specifically, China’s economy used 6.6 gigatons of cement between 2011 and 2014.  What a gigaton is we don’t really know.  But we assume it is something unfathomable heavy.  To put this in perspective, the U.S. used 4.5 gigatons of cement over the last 100 years.

What in the world compelled an entire nation to behave like utter blockheads?  Unsurprisingly, misguided stimulus policies pushed everyone beyond the absurd. Continue reading →