Like our resident market P.I. John Del Vecchio, Kyle Bass is one of those hedge fund managers who profited in the last crash when he bought credit default swaps to short the housing market.

He’s also one of the few financiers in the market today who says there’s a reasonable chance the U.S. will fall into a recession over the coming months. But he’s really on the money when it comes to China.

Mr. Bass estimates that China’s bad debt exposure is at least five times that of the subprime crisis in the U.S.

Think that’s enough to trigger the next global financial crisis and depression? You bet it is!

Two things are happening now in China that most people aren’t fully aware of. The country’s on track to create $4 trillion in new debt this year alone, or nearly 40% of its GDP, building houses for no one, while rural migrants are declining for the first time in 30 years.

In other words, the very people it’s overbuilding all these condos and infrastructure for are leaving! After decades of rapid urbanization, no one saw that coming.

In the first quarter of 2016, China added $1 trillion in new debt, which puts it on track to reach that $4 trillion figure. One trillion is about the same the U.S. did in QE in 2013. It’s the same the ECB did in 2014.

China’s done it in a single frickin’ quarter with an economy 60% our size!

Even if you take the highest level of QE that the U.S., Europe and Japan added in a single year, the most that would add up to is $3.3 trillion. So at $4 trillion, China is set to rack up more debt in one year than these other major countries did at their peaks, combined. And it’s mostly by creating money out of thin air.

Countries can do this in a couple of ways. They can expand their bank loans against 10% reserve deposits – basically issuing $10 million when they’ve only got $1 million in the bank – or they can use QE. It’s the difference between 90% money creation with the fractional reserve loans, or 100% for QE. It’s all crack to me!