About ten years ago I published an article in Foreign Policy that I just recently re-read. In the article I extended one of the arguments I made in my book, The Volatility Machine, that the globalization process is driven primarily by monetary expansion and the consequent increase in risk appetite. What was new in this piece, because I hadn’t realized it when I wrote my book, is that every period of globalization coincided with a stage of the industrial revolution in which accompanying the expansion in international trade and capital flows is a major technological boom, driven also by monetary expansion.
After re-reading the article I thought it might be useful to republish it on my blog with a couple of comments while waiting for the next entry (which should come out this week). I think the point it makes about the process in which globalization is reversed is still worth considering.
Read it at China Financial Markets
Michael Pettis | Senior Associate at the Carnegie Endowment for International Peace, Professor of Finance at Peking University’s Guanghua School of Management, and Chief Strategist at Guosen Securities (HK), a Shenzhen-based investment bank