@michaelxpettis The recepients of their savings will not be each other, but other dev countries who had to rely on USD for financing growth. What these countries need are not USD per se, but hard comms, tech and market access. All of which China is prepared to offer in the coming years. 2/2
@michaelxpettis It takes both a willing saver and a willing recipient to make a BoP. If one backs out of the relationship for other options the other one has to (unwillingly) adapt, or find another banker. China Russia and Saudi are the surplus nations in Zoltans framework. 1/2
@TOzgokmen I think you’ll find excellent equity returns in first half of each phase as built-up misallocations from previous «policy setting» get resolved. At the end of each phase you get volatility as misallocations build up, policy overshoots. That’s why last 20 years have been volatile.