Blokland’s chart: China’s M2 converted to dollars is ~$52T (in euros ~€53T) vs ~$23T for the US — more than twice the money stock for an economy a third smaller, with the crossover around 2009 and the gap still widening. He explicitly rejects the standard explanations (growth miracle, state banking, population) and teases his own — behind his newsletter, so the post is an ad; the claim to keep is the chart, not the unexplained “real reason.”
China is the extreme of a G7-wide pattern (Kobeissi, 07/2026): since 2004, M2 has outgrown nominal GDP everywhere — Canada +368% M2 vs +159% GDP, US +279/+171, France +258/+84, Japan +90/+25. Money outpacing output is the water everything swims in, not a Chinese anomaly; what varies is degree.
The method caveat before drawing conclusions: cross-country M2 comparisons conflate financial structures. China’s system is bank-centric — savings sit in deposits (inside M2) because capital controls block the exits and markets are shallow; US wealth sits in money funds, bonds, and equities (outside M2). Part of the “overhang” is a definition artifact. What’s left is still interesting: a captive $50T deposit stock behind capital controls is potential energy — if the exits ever open or trust in deposits breaks, the flow into hard assets, foreign assets, or gold would be enormous. Watch what China does (gold accumulation), not what it says — Blokland’s one good line.
The potential energy is visibly flowing (Wind data via DavidLe76335983, 08/2026, https://x.com/DavidLe76335983/status/2087329256518947129): China’s 7 domestic gold ETFs took in ¥21.3B in one week, total scale ¥244B (from ¥211B in early July); the Huaan gold ETF alone logged 18 consecutive days of net inflows — its longest streak since 03/2025 — reaching ¥103.8B. Deposits finding the one hard-asset exit that’s open domestically; the retail-premium side of the same flow is in The central-bank gold bid‘s Shuibei line.
The captive deposit stock has a price, and it is the bond yield (Schuldensuehner / Barclays, 09/2026, https://x.com/Schuldensuehner/status/2094186912495861979): China’s 10y at 1.70% sits 300bp below the US 10y at 4.72% — the lines crossed in 2022 and have diverged since — and Barclays’ reading is that this is not the market judging the two fiscal profiles but China’s closed capital account, high savings rate and lack of investable assets. The same $50T of deposits that can’t leave bid domestic bonds to 1.7% regardless of a debt load comparable to the US’s; the gap is the price of the closed door, plus domestic deflation. A yield that low under those conditions is the The financial-repression toolkit running at full capacity — and the reason the gold ETF flows above are the pressure reading.