Yavuz’s Reviews > Trade Wars Are Class Wars: How Rising Inequality Distorts the Global Economy and Threatens International Peace > Status Update

« It is more helpful to think of the CA balance as the independent variable,.... the aggregate result is determined outside America’s borders. » This presupposition haunts me, and one of the key insights from the book. It challenges the notion about how BW, American surplus cycle mechanism, got reversed and the dollars role in global financial system become more costly.

Although some of this can be blamed on insufficient regulation in the countries on the receiving end of these financial flows, the bigger problem is that the flows are too large and go to the wrong places. Popular antipathy to trade therefore stems from the failure of international capital to go where it is needed in forms that are useful.

Two things determine whether an imbalance is healthy or dangerous:how the money is raised and how the money is spent. Ideally, richer countries make FDI in poorer ones with lots of potential. In the past few decades surplus countries have been lenders, rather than shareholders, while deficit countries have often been mature economies that lack useful projects in need of outside funding. The result: debt booms.

This book was what i needed! I recommend it to everyone, read this book to understand the dynamics between international credit flows, trade and inequality. A must read for conceptualizing a better and just world where all can prosper and develop. Our global system is bankrupt, we need to reestablish capital control, limit cross-country lending and allow rich countries to import more so that poor can make investment