"There is so much money"

Chinese inflation hits 6.5%, highest rate in nearly 11 years
"Inflation expectations have begun to rise, and the government should do something significant," said Jim Walker, chief economist at CLSA Asia-Pacific Markets in Hong Kong. "Otherwise, the stock and property bubbles will get bigger and eventually crash."

The latest figures raise the risk of social unrest as the Communist Party prepares for its 17th National Congress, a five-yearly meeting starting Oct. 15 that will decide leadership changes.

"What worries me more is the liquidity in the market," Wuttke said. "There is so much money, and given all these exports and the money that comes back in U.S. dollars and also this easy credit, that really causes a major concern."

Gains in consumer prices have outpaced returns on bank deposits, encouraging households to switch money to property and stocks despite government warnings that equity markets may be overvalued.

A Simple Plan for the Chinese Government

Increase the inflation of property and stocks while simultaneously decreasing the inflation in food, staples, and energy. Win win!

In other words, print more money (and/or lower interest rates) while simultaneously printing less money (and/or raising interest rates).

The actual implementation of the plan I'll leave to the Chinese government. Once the Chinese government figures out the best way to do it we can only hope they'll share the secret with us.