economics

This dominance helped sustain global demand for dollar reserve assets. On the one hand, this has allowed the US to borrow more and at lower cost, generating sizable excess returns on external claims relative to external liabilities (the “exorbitant privilege” of the dollar). But it has also increased the exposure of the US external position to

Everything is sales. This is usually framed as career advice—no matter what your role in a company is, your ultimate job is to help sales.

But China also has an extraordinarily high investment rate, the highest in the world, and this is something that is in principle unlikely to be accompanied by a high trade surplus. After all the current account surplus is exactly equal to the excess of savings over investment, and any country with an extraordinarily high investment rate should

The reason behind this imbalance was understood by Marriner Eccles, chairman of the U.S. Federal Reserve from 1934 to 1948, who argued that high levels of income inequality in the United States were in effect “a giant suction pump” that had “drawn into a few hands an increasing portion of currently produced wealth.” Because the rich consume a far

Beijing often does not provide financing: instead, it gives local officials broad discretion to arrange off-balance-sheet investment vehicles with the help of regional banks to fund projects in priority sectors, with the national government limiting itself to specifying which types of local financing options are prohibited. About 30 percent of

For the US Dollar, all of these factors can be boiled down to the direction of commodity prices. This relationship is special to the US Dollar, and isn’t shared by any other currency. It is not due to the fact that the US is a large consumer of certain resources as the correlations don’t change when the US is a net exporter of oil, for example

3. "Don't Fight the Train" Despite the long-term risks, Menon advises investors not to bet against this dynamic yet. As long as the CapEx spending continues to grow, the "profit juice" will keep flowing, keeping aggregate earnings per share (EPS) high and supporting the stock market. The signal to watch is not the level of spending, but the rate of

Pricing power has arguably been the most enduring determinant of high returns for these investments. It has come from two main sources. The first is a concentrated market structure, closely associated with effective management of capacity through the demand cycle which encourages a rational approach to pricing. The second is “intrinsic” pricing