We will have a reversion to pre 2013 conditions.
ANY printed money will end up in Brazil, Mexico and Indonesia.
The effects of the measures taken post 2013 will be reverted and that will benefit the Emerging Markets.
Here is what happened from 2013 onwards:
Taper Tantrum, FED toying with higher interest rates, the lower corporate taxes that repatriated US$ back to the US all that drew capital from EMs.
Any time in the past that this big inflow of capital into the developed countries happened, it created excesses in the developed cpuntries.
Remember the late 1980s? Yuppies with yellow ties. BMW the Ultimate machine? Ok, you saw Gordon Gecko, Wall Street, don't you? That happened. and was financed, on the back of the debt crisis that took a gigantic amount of capital from EMs to developed countries
Fast forward to 1997-98 Asian Meltdown. That excess of capital repatriated created the Tech Bubble, which was much bigger than anything we have witnessed before.
Any time the excesses overwhelm the developed countries, capital returns to EMs. From the exit of the Gold Standard by Nixon, to Clinton's Washington Consensus, capital always returned to EMs completing the cycle. |
