He said that it would overheat the engine.

And they always overheat the hotels in Korea terribly, so during the day I always left the window open.

Since then, heavy industries steel, automobiles, machinery, building materials, energy, and raw materials have experienced an unprecedented investment boom, reflecting demand for urban construction, housing, transport, infrastructure, and equipment renewal. Not surprisingly, the economy began to overheat.

There is essentially no risk that the economy would overheat so quickly that the Fed could not intervene in time to prevent excessive inflation. Whatever the unemployment rate at which inflationary pressures become significant a key question for policymakers we know that it is far lower than the rate today.

But such an insignificant rate hike will do little to relieve long term pressures, because investors will expect more rate hikes and move money into China, increasing upward pressure on the yuan s exchange rate. Indeed, the logic is self fulfilling as more foreign currency flows into the market, the economy will continue to overheat, necessitating further interest rate hikes.