Michael Pettis Blog | Talkmarkets | Page 1
Professor at Peking University
Contributor's Links: China Financial Markets

Michael Pettis is a professor at Peking University's Guanghua School of Management, where he specializes in Chinese financial markets. He has also taught, from 2002 to 2004, at Tsinghua University’s School of Economics and Management and, from 1992 to 2001, at Columbia ... more

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EC Why Does It Matter If Interest Rates Are Below The GDP Growth Rate?
There is a widespread belief that a country’s national debt burden is sustainable if the interest rate on its debt is less than its expected GDP growth rate.
HH China’s Economy Needs Institutional Reform Rather Than Additional Capital Deepening
It is a mistake to assume that there is a global capital and technology frontier toward which every country must strive to acquire development. Economic development requires, above all, the right set of formal and informal institutions.
Why Higher U.S. Savings Won’t Save The Pandemic-Hit Economy
If the U.S. government does not decisively increase spending, higher American household savings will force either American debt or unemployment to rise even more.
EC Why It Won’t Matter Who Pays For Trade Protection
The debate about whether it is U.S. consumers or Chinese businesses that pay for American tariffs on Chinese-produced goods reveals absolutely nothing about whether the tariffs harm or benefit the U.S. economy.
EC MMT Heaven And MMT Hell For Chinese Investment And U.S. Fiscal Spending
There are conditions under which governments can create money—or debt—without fear of inflation or excessive debt burdens. There are other conditions that can lead to inflation and balance sheet problems.
Washington Should Tax Capital Inflows
Taxing capital inflows is a far better way to balance trade than imposing tariffs. This would address the root causes of trade imbalances, improve the productive investment process, and shift most of the adjustment costs onto banks and speculators.
Facebook’s Libra: Does The World Need Frictionless Money?
Facebook seems to think its new digital currency Libra will be used mainly for purchasing goods and services and for current account transactions. But it will probably be used mainly for capital account transactions.
Wealth Should Trickle Up, Not Down
Income inequality in the United States hampers growth and forces up debt. In advanced economies in which investment is not constrained by scarce savings, high levels of income inequality lead automatically to either more unemployment or more debt.
Does The UK Benefit From Chinese Investment?
While foreign investment usually benefits developing economies and creates local economic benefits in advanced economies, it generally does not benefit advanced economies on the whole except in very limited cases.
EC China Cannot Weaponize Its U.S. Treasury Bonds
A number of recent articles suggest that Chinese officials may reduce their purchases of U.S. government bonds. It is very unlikely that China can do so in any meaningful way because doing so would almost certainly be costly for Beijing.
Should The United States Run A Trade Surplus?
Although standard trade theory predicts that highly advanced economies with sophisticated financial sectors, like the US, should generally run trade surpluses, the country has run persistent, and often large, trade deficits for five decades.
Why U.S. Debt Must Continue To Rise
Debt is rising more quickly in the United States than most people would prefer. This is happening in part because the U.S. current account deficit and the country’s high level of income inequality distort the structure and amount of American savings.
What Is GDP In China?
Analysts are increasingly skeptical that China’s very high reported GDP growth rate provides a meaningful picture of the economy’s health.
What China’s Online Shopping Craze Says About Its Bubble Economy
On November 11, China celebrated Singles’ Day, a holiday that in the span of a few short years has become the most important day of the year for Chinese e-commerce. Sales on Alibaba, are the bellwether for its success.
Beijing’s Three Options: Unemployment, Debt, Or Wealth Transfers
China’s debt problems have emerged so much more rapidly and severely this year than in the past that a growing number of analysts believe that this may be the year that China’s economy breaks.
EC Tariffs And Trade Intervention
The United States cannot engage in beggar-thy-neighbor policies because it cannot run a trade surplus.
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