Warnings about China’s debt burdens and a potential debt crisis there are nothing new. China has a higher debt-to-GDP ratio than the U.S., and China’s central bank has printed more money since the 2008 financial crisis than the Federal Reserve.

Much Chinese debt is denominated in dollars, which get harder to repay as the yuan weakens. Plus, other debt is owed by one state-owned enterprise to another in a daisy chain of bad debts that everyone pretends can be repaid (they can’t).

Still more debt is in the form of wealth management products, or WMPs. The WMPs are high-yield securities deceptively sold as bank deposits (they’re not) and invested in real estate projects that cannot repay the loan. All of this is bad enough, but according to this article, things just got a lot worse.

It turns out that local governments and provinces have issued $6 trillion of off-the-books debt that was not accounted for in previous financial analyses. To put that in perspective, $6 trillion is equal to almost 30% of the entire U.S. national debt, and that’s just the newly discovered part, not counting all the other debt China already has.

China’s Communist dictator-for-life Xi Jinping started a debt clean-up and deleveraging program last year, but that has already been abandoned in favor of still more debt to build infrastructure. China’s debt is so sketchy that it cannot be rolled over or refinanced except by the Chinese government itself.

This Ponzi scheme is coming to an abrupt halt even faster than we thought. The problem is that what happens in China does not stay in China. A Chinese debt crisis will become a global liquidity crisis faster than almost anyone knows.

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