China's economic woes deepen as deflationary trends intensify. September data reveals a sharp decline in producer prices, dropping 2.8% year-over-year. This marks two consecutive years of deflation, outpacing August's 1.8% fall and economist predictions.

Consumer prices barely cling to positive territory, rising just 0.4% annually. Core inflation hit a three-year low at 0.1%, signaling persistent weak demand. The property market slump continues to drag on the economy, prompting Beijing to consider further stimulus measures.

China's situation highlights a fundamental weakness in the global fiat currency system. Rising prices are crucial for governments to push debt burdens into the future, and deflation poses a significant threat to this model. With China's real estate market collapse, the country may need to generate unprecedented levels of stimulus and artificial state demand to counteract the deflationary spiral.

And Chinese politicians are reacting to this debacle by announcing new stimulus programs day after day, accelerating step by step, driving the volume of credit ever higher. China will not be able to avoid massively expanding its monetary and fiscal activities and devaluing its currency. The collapse of the real estate market could have been the key to understanding a deflationary shock in the medium term.