Michael Pettis's Contributions

A US Retreat on Global Trade Will Not Lead to a Shift in Power

The very first on the list of executive actions that his administration would implement from “day one,” according to US President-elect Donald Trump in his November 21, 2016, video clip, involved a US retreat on trade...

The Titillating and Terrifying Collapse of the Dollar...Again

Foreign perceptions about the Chinese economy are far more volatile than the economy itself, and are spread across a fantastic array of forecasts. On one extreme there are still many who hold the view that overwhelmingly dominated...

Will China’s New “Supply-Side” Reforms Help China?

It wasn’t enough that we started 2016 with one of the worst weeks in the recent history of Chinese and global markets, but the panic continued into the following weeks and wreaked a great deal of damage to confidence. A lot of the reflexive...

Why “Thin Air Money” Isn’t Created Out of Thin Air

A recurring conversation I have with clients concerns the ability of banks to create credit, and of governments to monetize debt, and whether this ability is the solution to or the cause of financial instability and economic crisis.

Pettis: Chinese Debt-Related Shocks to Last for Years

With so much happening in China in the past month it seems that there are a number of very specific topics that any essay on China should focus. I worry, however, that we get so caught up staring at strange clumps...

Do Markets Determine the Value of the RMB?

Last Tuesday the PBoC surprised the markets with a partial deregulation of the currency regime, prompting a great deal of discussion and debate about the value of the RMB. Part of the discussion was informed by...

China’s Stock Markets and Revisiting 2011 Predictions

I plan to post a new entry very soon but before doing so I wanted to say a few things about the stock markets, which continue to be insane (but not unexpectedly so) and then repost a blog entry that is nearly five years old.

Interpreting Information in China’s Stock Markets

Anyone who reads my blog is already likely to know the story. Until the market peaked on June 12, with the Shanghai Composite at 5,178, China had experienced a stock market boom that saw the Shanghai index...

Please Mr. Lew Do Not “Diminish” Alexander Hamilton

What can they possibly be thinking? This is not the sort of thing I normally write about, but I have to say that if I had any say in the matter I would most strenuously oppose removing or ‘diminishing” Alexander...

Internal and External Balance

I was recently asked by an Australian economics journal to write a review of a book I had already read, The Leaderless Economy, by Peter Temin and David Vines (published in 2013). Because the book is a great place from which...

Does the AIIB Signify the End of the American Century?

As I see it, the creation of the AIIB is not nearly as important as everyone seems to think, and if Beijing’s decision to create the AIIB, and Washington’s decision to oppose it, was part of the struggle for future geo-political...

Europe’s Survival Depends on Debt Restructuring, Not Growth

The biggest constraint to the EU’s survival is debt. Economists are notoriously inept at understanding how balance sheets function in a dynamic system...Europe will not grow, the reforms will not “work”, and unemployment will not drop...

Syriza and the French Indemnity of 1871-73

Today’s Financial Times has an article discussing the travails of Greece’s new Finance Minister, Yanis Varoufakis as he takes on Germany. The European debt crisis is not a conflict among nations. All economic systems...

Can Monetary Policy Turn Argentina Into Japan?

Monetary policy is as much about politics as it is economics. It affects the ways in which wealth is created, allocated, and retained and it determines the balance of power between providers of capital and users of capital.

Inverted Balance Sheets and Doubling the Financial Bet

On Tuesday the National Bureau of Statistics released China’s 2014 GDP growth numbers and reported growth consistent with what the government has been widely promoting as the “new normal”.

How Will Long-Term Deflation in China Impact the World?

The current data suggests that China is facing deflationary pressures, much like Japan has since the early 1990s. How will this affect the world compared to Japan’s deflation and long might it take China to overcome this challenge?

My Reading of the FT on China’s “Turning Away From the Dollar”

The Financial Times ran a very interesting article last week called “China: Turning away from the dollar”. It got a lot of attention, at least among China analysts, and I was asked several times by friends and clients for my response. The authors, James Kynge and Josh Noble, begin...

How Might a China Slowdown Affect the World?

Two years ago it was hard to find analysts who expected average GDP growth over the rest of this decade to be less than 8%. The current consensus seems to have dropped to between 6% and 7% on average.

Michael Pettis on Why We Need a New Global Monetary System

Nov 11 – Cris Sheridan, Senior Editor of Financial Sense welcomes Michael Pettis, a Beijing-based economic theorist and financial strategist. Professor Pettis explains why the world needs a new global monetary system and the conditions under which holding the world’s reserve currency are an exorbitant privilege vs. an exorbitant burden.

China, Europe, and Optimal Currency Zones

Although I think China is clearly much more integrated as an optimal currency zone than Europe is today, it is probably less integrated than the US (I will use the US and Europe as the two extreme cases between which China falls). China of course does not have the problems of multiple sovereignty...

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