4 ms·

Thank you so much - I’m so glad you enjoyed it! If you’re interested in this topic I highly recommend “The Great Rebalancing” by Micheal Pettis. A really good

Thank you so much - I’m so glad you enjoyed it! If you’re interested in this topic I highly recommend “The Great Rebalancing” by Micheal Pettis. A really good book that looks at how currency manipulation and other factors have created imbalance in the global economy. I’ve also written a book which touches on this - but focuses more on the massive sovereign debt burdens that have been created in large part though these trade imbalances - particularly in an aging world. https://www.cassandracapital.net/books https://www.cassandracapital.net/books

mooreds 7y ago
If you like Pettis, you may also want to subscribe to his blog: https://carnegieendowment.org/chinafinancialmarkets/ https://carnegieendowment.org/chinafinancialmarkets/ I have enjoyed his perspective for years.
- joshuafkon 7y ago
  He has an excellent blog - he’s also active on Twitter. I believe he’s @michaelxpettis
  - dragonsh 7y ago
    Excellent article, have one question, besides economics, the main reason a country can produce cheaply is dependent on highly productive labour, non union structure and friendly labor laws for industries. This is one of the reason besides Japan, Korea, Germany and China other countries did not fair that well. How do economist put value to this intangible forms? Every country manipulate currency to some extent including USA. So why not revamp the system completely.
    - mooreds 7y ago
      Check out the "Impossible Trinity": https://en.wikipedia.org/wiki/Impossible_trinity https://en.wikipedia.org/wiki/Impossible_trinity A country can have two of the following three w/r/t its currency (but not all three) a fixed foreign exchange rate free capital movement (absence of capital controls) # the USA likes this, or rather investors in the USA do an independent monetary policy # most everyone wants this China chose fixed rate and independent monetary policy, the USA chose free capital movement and independent monetary policy.
      - dragonsh 7y ago
        That's a very useful information didn't know about it. It's like CAP theorem in distributed systems can't have all 3.
        mooreds 7y ago
        Worth noting that this is a theory, but there's definitely empirical evidence for it.
      - mamon 7y ago
        And Eurozone countries chose the first two, giving up independent monetary policy :)
        mooreds 7y ago
        Right. And countries like Greece saw the ... complications of that choice.
hencq 7y ago
Great article! I was not aware of China's need for dollars due to dollar denominated debt. One question I still have is how/why they ended up with dollar denominated debt as opposed to debt in RMB? Also, who currently holds this debt?
- deleted 7y ago
  [deleted]
- himlion 7y ago
  Because the interest rate on RMB denominated debt would be (much) higher, since there is a significant currency risk.

mooreds 7y ago

If you like Pettis, you may also want to subscribe to his blog: https://carnegieendowment.org/chinafinancialmarkets/ https://carnegieendowment.org/chinafinancialmarkets/ I have enjoyed his perspective for years.

joshuafkon 7y ago
He has an excellent blog - he’s also active on Twitter. I believe he’s @michaelxpettis
- dragonsh 7y ago
  Excellent article, have one question, besides economics, the main reason a country can produce cheaply is dependent on highly productive labour, non union structure and friendly labor laws for industries. This is one of the reason besides Japan, Korea, Germany and China other countries did not fair that well. How do economist put value to this intangible forms? Every country manipulate currency to some extent including USA. So why not revamp the system completely.
  - mooreds 7y ago
    Check out the "Impossible Trinity": https://en.wikipedia.org/wiki/Impossible_trinity https://en.wikipedia.org/wiki/Impossible_trinity A country can have two of the following three w/r/t its currency (but not all three) a fixed foreign exchange rate free capital movement (absence of capital controls) # the USA likes this, or rather investors in the USA do an independent monetary policy # most everyone wants this China chose fixed rate and independent monetary policy, the USA chose free capital movement and independent monetary policy.
    - dragonsh 7y ago
      That's a very useful information didn't know about it. It's like CAP theorem in distributed systems can't have all 3.
      - mooreds 7y ago
        Worth noting that this is a theory, but there's definitely empirical evidence for it.
    - mamon 7y ago
      And Eurozone countries chose the first two, giving up independent monetary policy :)
      - mooreds 7y ago
        Right. And countries like Greece saw the ... complications of that choice.

hencq 7y ago

Great article! I was not aware of China's need for dollars due to dollar denominated debt. One question I still have is how/why they ended up with dollar denominated debt as opposed to debt in RMB? Also, who currently holds this debt?

deleted 7y ago
[deleted]
himlion 7y ago
Because the interest rate on RMB denominated debt would be (much) higher, since there is a significant currency risk.