China's GFC Is Here

Inflation isn’t just rising prices—it’s an expansion of the money supply.

And when central banks print trillions, that currency has to go somewhere. Over the past 15 years, it didn’t just land in groceries or gas. It flooded into homes and stocks, distorting asset values through artificially cheap debt and a spiraling cycle of currency debasement.

Housing became the illusion of stability—the collateral base for middle-class wealth across the world. But now comes the reckoning. China’s residential real estate alone makes up ~26% of global residential property value—the single largest segment on Earth. And while real estate markets are often seen as local (“location, location, location”), the hyperconnected global funding machine is not.

Via @KobeissiLetter

Liquidity is global. Carry trades, shadow banking, and synthetic dollar flows have tied these markets together through invisible pipelines of trust.

So as China’s housing market continues its slow-motion collapse—with July’s new-home sales plunging 38% MoM—the question isn’t if the fallout will spill over.

The question is where the next cracks will emerge. Let’s explore why this is not just a Chinese housing story, but a global collateral story—and how it will affect everything.

Again, China’s residential real estate accounts for ~26% of all global housing value. And housing isn’t just shelter—it’s the asset base, the credit foundation, and the illusion of prosperity for the middle class worldwide.

Let’s circle back to our July 19th report: 🇨🇳 China is now injecting liquidity at full blast. Their M1 money supply—its most inflation-sensitive gauge—is accelerating 10× YoY (from 0.4% to 4.6%), outpacing even the U.S. What does that mean?

China is unleashing a tidal wave of liquidity—and it won’t stay within its borders.

• More Chinese liquidity → global inflation pressures rise

• Global inflation → higher sovereign yields everywhere

• Higher yields → stress on global bond markets and collateral chains

• More stress → central banks scramble to backstop repo markets

• That backstopping → shadow QE

• Shadow QE → accelerated currency debasement worldwide

This isn’t localized. This is how a slow-motion collapse in China’s housing sector destabilizes the entire global financial plumbing. Because Chinese M1 alone = ⅓ of all G10 liquidity. And liquidity is not contained—it flows through shadow banks, carry trades, and synthetic USD pipelines that link Beijing to Brussels to Brooklyn.

What starts in China doesn’t stay in China. It floods the entire system…and when the foundation is already cracking, it accelerates the collapse of trust in fiat itself. And what is China doing with that liquidity? They’re not buying Treasuries. They’re buying gold. Of course they’re buying gold. China isn’t just injecting liquidity—they’re hedging it.

They know exactly what happens when too much currency chases too little trust. So they’re front-running further fractures in the base layer of global finance—U.S. Treasuries and Japanese Government Bonds—by loading up on the one asset no one can print: Gold. While the West debates soft landings and rate cuts, Beijing is quietly rewriting the collateral rules—trading paper for weight. They’re not guessing. They’re preparing.

• China’s total gold ETF holdings are up +74% YoY

• Chinese gold ETF demand hit record highs in Q2 2025

• The PBoC just added for the 8th consecutive month—while unofficial purchases in London may be 8x the reported amount

They’re pulling capital out of the old system (U.S. debt)...…and anchoring into a new one (physical gold). This is the re-collateralization of global finance. In secret. In slow motion. But gaining speed.

As the old base layer (Treasuries, JGBs) frays under the weight of debt, nations are sprinting back to hard money—quietly and urgently. The consequence? Gold and silver aren’t just inflation hedges—they’re becoming the only assets with no counterparty risk in a system that’s failing at the foundational level.

The collapse in Chinese housing is triggering a global repricing of trust, collateral, and currency itself. And when 26% of the world’s real estate starts crumbling…and China starts swapping bonds for bars… Gold and silver won’t just rise. They’ll re-price the entire monetary order—one crack, one bid, one bar at a time.

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When the second-largest economy torches its collateral base to paper over the cracks, it doesn’t just weaken itself—it accelerates currency debasement worldwide. This isn’t local. This is global liquidity distortion. Sovereignty isn’t a hedge. It’s the fire escape. Move now—before fiat melts faster than trust.

Luke Lovett
📲 Cell: 704.497.7324
🌐 Undervalued Assets | Sovereign Signal
📧 Email: [email protected]

Disclaimer:
This content is for educational purposes only—not financial, legal, tax, or investment advice. I’m not a licensed advisor, and nothing herein should be relied upon to make investment decisions. Markets change fast. While accuracy is the goal, no guarantees are made. Past performance ≠ future results. Some insights paraphrase third-party experts for commentary—without endorsement or affiliation. Always do your own research and consult a licensed professional before investing. I do not sell metals, process transactions, or hold funds. All orders go directly through licensed dealers.