Also it is suspected that China have been buying massive amounts of gold due to not reporting their gold stock since 2009, they do not want the US dollar as the reserve currency anymore, Russia has publicly stated that the US dollar will be a thing of the past. China does have a high corporate debt but they have real wealth as well, they have a strong manufacturing base and their citizens have a high savings rate, if they allow the Yuan to appreciate against the dollar the wealth of their citizens will increase dramatically and they will be able to import more, if they stop exporting their goods to the US for their worthless dollars they can start consuming what they produce and increase their wealth further.
Yes Obama has been destroying the economy with Obamacare but that doesn't mean we won't have inflation, in fact a contracting supply of real wealth will only make whatever remains more expensive. High tax rates and bail-ins does not mean we will have deflation, they will only destroy what is left of the productive economy, who will want to hold the dollar then if they cannot buy anything with it?
You don't understand relative size. The USA is still the driver of the global economy. The Yuan does not have enough size and liquidity to replace the dollar during the cycle. China will first significantly correct because their corporate debts are the highest in the world now, their economy is incredibly unbalanced and dependent on exports and fixed capital investment (no worse example in human history). Later in the 2020s or by 2032 after it has rebalanced towards domestic consumption with a decade long severe correction, then China will start growing again and find that it is becoming the financial center of the world.
But first, we go to a strong dollar and massive global deflation. The USA and the NSA will thus be in the driver's seat of the default of $150 trillion in debt. They will not give up this power. They plan to charge to all of us. This is massive deflation.
You also don't understand that $150 trillion global debt means every one has been doing the wrong activities and everything is uneconomic.
You don't understand that debt is not just a ledger item, it also reflects real waste of human years, wrong skills acquired, wrong decisions made, etc.. These real problems are not corrected just by changing a line on the financial ledger.
This frustration is why
riots and global unrest (and the war cycle) is increasing all over the world right now. There is no way to avoid the global deflation contagion.
Can you explain to me though the mechanism by which deflation occurs? Perhaps a hypothetical walkthrough.