In this recent SCMP article, Dr Andy Xie discusses how the U.S. Federal Reserve’s monetary policies have contributed to a financial crisis akin to an “opioid crisis” in the West.
Dr Xie argues that the Fed’s low-interest rates and quantitative easing have created an environment of excessive liquidity, leading to asset bubbles and unsustainable debt levels.He compares this situation to the opioid crisis, suggesting that just as opioids provided temporary relief but led to long-term addiction and suffering, easy access to cheap credit has fostered financial dependency among consumers and businesses. The article warns that this cycle of borrowing and reliance on low rates is unsustainable, with potential severe consequences for the economy when interest rates eventually rise or when the asset bubbles burst.
Dr Xie emphasizes the need for a reevaluation of monetary policy to prevent further economic instability and advocates for a more balanced approach that considers long-term economic health over short-term gains.
Here are some highlights:
If re-elected, Trump would erect a Fortress America of trade. Parts and components made in Europe or Japan would be suspect, and those made in Canada or Mexico would be unlikely to fare any better. In 2016, “Make America Great Again” probably meant moving the country back by about three decades, but now it looks like it could regress to a century ago.
The most immediate impact would be on the world’s middle industrial and technology powers. They thrive because they can leverage global supply chains and the size of the Chinese and American markets to scale up and become more efficient. Fortress America would force them to relocate to the US to sell there.
Dr Andy Xie 謝國忠, is an independent economist, director of Rosetta Stone Advisors and is one of the few economists who has accurately predicted economic bubbles including the 1997 Asian Financial Crisis and the more recent subprime meltdown in the United States.
He was a part of Morgan Stanley in 1997 and the Managing Director and Head of the firm’s Asia/Pacific economics team until 2006. He also spent two years with Macquarie Bank in Singapore, an associate director in corporate finance and five years as an economist with the World Bank.
Dr. Xie earned a PhD in economics in 1990 and an MS in civil engineering in 1987 from the Massachusetts Institute of Technology.
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