A lot of Pundits attribute the good response of the U.S. economy to the monetary expansion (post bail out era) and the various fiscal stimulus . I do not agree with that conventional wisdom . In my humble opinion Mr Bernanke did the right thing but the good reaction of the industrialized economies is because of the extraordinary performance of emerging economies which increased the global aggregate demand for resources, products and services.
The last decade emerging markets economic policy favored the exporting sector , creating huge surpluses in the trade balance and huge current account surplus, and thus modifying the world financial landscape, now the so called poor countries are cash rich and finance the so called rich companies. I don’t like to forecast but the logic policy response from the emerging markets its now to support their consumers and look to endogenous growth, making their markets more independent (Brazil ‘s case). The before mentioned will revert the trend of trade imbalances in the world because at one point emerging countries will not like to continue financing the rich and on the other hand it is not sustainable.
The new economic destination is a picture were the rich are not that rich and the poor are less poor , with a lot of ups and downs but guiding to a new secular destination of global growth , higher inflation , no more cheap Asian labor and surging commodity prices….
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