FYI: Remember China ?
China’s entry to the World Trade Organization in 2000 ushered in a new era in free
trade, unleashed deflationary competition and established a tacit currency regime in which
excess Asian savings from explosive export growth were recycled into US Treasuries
,
funding US deficits and keeping both inflation and real rates low. By the time of the
financial crisis, China had become the world’s second
-largest economy and the largest
consumer of nearly every major commodity. In 2011, when the Federal Reserve was
pursuing
radical monetary policies to avoid an even deeper deflationary crisis, China
enacted the biggest fiscal stimulus program in history, driving nominal GDP growth to
20%
. While this stimulus likely saved the global economy, it drove China’s debt-
to -GDP
ratio to extremes.
Regards,
Ted
https://www.morganstanleyfa.com/public/projectfiles/gicweekly.pdf
