Читать книгу Financial Cold War. A View of Sino-US Relations from the Financial Markets онлайн

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Tracing back to the end of WW2, as the Cold War was getting under way, the world was unwittingly entering into a Financial Cold War, in which it has been engaged ever since. The opening shot of this war was the Bretton Woods Agreement of 1944, which lodged the US dollar at the centre of the global monetary system. Financial systems, like all ecosystems, thrive on equilibrium. The dollar's centrality in the financial order created by Bretton Woods spawned an imbalance that has since grown and multiplied. The Financial Cold War has played out over two key battlefronts.

The first has been the division of resources between countries. The dollar-centric global financial system has created international demand for dollars that has provided the US with low-cost capital without any currency mis-match risk. Other countries, notably emerging markets that have needed to insure against periodic dollar exchange rate volatility, have borne a high cost for this. However, to keep the world supplied with sufficient dollar liquidity, the US was required to run continual balance of payments deficits. The lack of any structural mechanism for revaluing the currencies of countries with persistent large balance of payments surpluses has forced America to become the world's ‘consumer of last resort’. This has transferred productive capacity to other countries and, unless the US is able to constantly expand its economy faster than its cumulative balance of payments deficits, the rising debt burden will drag on future growth. It was fortuitous that America's lead in the information technology revolution allowed it to maintain strong growth with low inflation for a quarter of a century. However, in recent years, rapidly rising public debt has given rise to concerns over America's long-term financial stability, exacerbated global financial imbalances, and created tensions with large foreign holders of US public debt, including China, due to the risk of monetary inflation.