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 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.
High Wages Versus High Savings In A Globalized World
Democracies will increasingly have to choose between raising wages and redistributing income or maintaining free trade and capital flows. Because they are likely to choose the former, the world may face a long-term reversal of globalization.
The GDP Of Bridges To Nowhere
GDP growth is a measure of economic output generated by economic performance. But China sets annual GDP growth targets it expects to meet. GDP growth as an economic input, rather than an output, radically changes its meaning and interpretation.
China: Choosing More Debt, More Unemployment, Or Transfers
Since 2010-11, and even more so in the past year or two, it has often been difficult to evaluate the consistency of Beijing’s policies within China’s economic rebalancing. This shouldn’t be surprising.
The Impact In China And Abroad Of Slowing Growth
While the chances of a disruptive adjustment – including a financial crisis – are clearly rising, for now I will assume, as I have since 2009-10, that China is able to pull off a non-disruptive rebalancing.
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