5 of 6 people found the following review helpful
Clear articulation for the muddled minds on macro-economics,
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This review is from: The Great Rebalancing: Trade, Conflict, and the Perilous Road Ahead for the World Economy (Hardcover)
Get out the bad stuff first. It is pedantic, and goes over the same examples numerous times which maybe painful for the unmuddled mind. But keeping the signs straight as lowering trading deficit is equal to raising the trade surplus; this requires repetition for the layman who is the intended audience.
The good stuff. He clearly exposes how currency manipulation, trade tariffs, labor laws, consumptive taxes and Central bank rates all distort the saving/investment rate in each various countries. This is best part of the book, and provides and abstract framework for understanding these distortions. Forget the moralizing of frugal and spendthrift cultures, he makes a very compelling case the government policy is the primary driver of macro trade imbalances.
Contrary to some other criticism of Pettis, he does not claim the trade imbalances cause financial crises, in fact he constantly says how imbalances can persist for long periods of time. However after a financial crisis, the trade imbalance can determine the pain and suffering recovering from the crisis, because the trade imbalance will revert back toward the mean. He has very interesting predictions for German and Japan as surplus nations.
I recommend highly to any independent thinker who wants to grasp the big mscro picture, and avoid the nonsense of most conventional economists.