This round of global imbalance is not a macro problem; its root cause is the AI capex frenzy
America's expanded AI capex pushes up investment; stock market prosperity drives consumption; savings fall, investment rises—this is the true driver of this round of global imbalance escalation.
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The argument · tap a timestamp to hear it
Raising utility costs does not necessarily push up inflation
A proposal to raise water and electricity prices to lift inflation reflects partial equilibrium thinking, but the real world runs on general equilibrium: when utility costs rise, households cut spending on clothes, takeout, and other goods—total budget stays the same, so current-period inflation need not rise. More broadly, if households expect sustained power-price increases and anticipate real income loss, they curtail consumption further. Since what you spend is someone else's income, when you don't spend, others don't earn—and inflation can flip into more severe deflation. This is what Keynes called the paradox of thrift.
— Miao YanliangSouth Korea's monetary policy may not be set in South Korea
The former governor of the Bank of Korea once joked that Korea's policy barely moves, yet every shift in US Treasury yields triggers wild swings in Korean bond yields—so much so that he suspects Korea's monetary policy is actually set in the US. This illustrates that the dollar tide is the risk-appetite cycle: money flows into emerging markets when the dollar weakens, inflating asset prices; money flows back to the US when the dollar strengthens, deflating those same prices. China, by contrast, faces less exposure to this tide because it relies primarily on domestic demand and possesses strong industrial competitiveness, giving it more room to maneuver.
— Miao YanliangThe longer the logical chain, the more likely it is to break
A short-dollar hedge fund laid out a multi-step thesis: AI capex slows → US equities lose their engine → recession → monetary easing → fiscal expansion → sell dollars. But here's a principle: logic chains cannot be too long. Murphy's Law says if anything can go wrong, it will—each additional link multiplies the probability of failure. History also offers counterexamples: fiscal deficits did not necessarily weaken the dollar. In the 1980s under Reagan, and during the 2020 stimulus, the dollar failed to weaken as predicted, because rising rates and strong growth prospects drew inflows.
— Miao YanliangVolcker could tighten aggressively; today's America cannot
Paul Volcker had the room to raise rates decisively partly because US debt was about 230% of GDP back then. Today it stands at around 120%—yet the constraints are entirely different. Fiscal spending is now much more rigid. The key to whether Treasuries can handle higher rates is the R<G formula: as long as the interest rate stays below nominal growth, the primary deficit stays sustainable and debt-to-GDP won't spiral. Right now, the 10-year Treasury yield is about 5%, inflation around 3%, nominal growth around 6%—R is still less than G, so it holds. But this cycle has already seen yields rise from 4.5% to 5.3%, and now back to about 5%. Global investors are demanding higher risk compensation, and the debt dynamics are growing increasingly adverse.
— Miao YanliangThe safe-haven halo of US Treasuries is developing cracks
Over the past year-plus, stocks and bonds have fallen together multiple times—what traders call ‘三杀’, or the triple hit. By traditional definition, safe assets should move inversely to equities; capital should flee to them in a crisis. But this time, Treasuries did not play that role. The convenience yield on long-dated Treasuries has vanished; the risk-adjusted cost of borrowing is no longer materially cheaper than other sovereigns' debt. Only short-dated Treasuries retain a liquidity premium. This suggests global investors are demanding that Treasuries pay a more reasonable risk premium. If other buyers step back far enough, the ultimate buyer—very likely—will be the Federal Reserve itself.
— Miao YanliangThe AI era offers no one-size-fits-all wealth-generating asset
The question came up: for two decades, Chinese investors built wealth buying property, Americans by buying and holding the S&P 500. Is there a similar asset—something you can buy, hold, and benefit from—in the AI age? The answer is that this post-hoc certainty is an illusion in the first place. Even the S&P 500's long bull run included people who bought at the top, couldn't stomach the drawdown, and sold early. Real estate eventually hit an inflection point. Benefiting from AI is not just a matter of which asset you buy; it depends on whether your income grows and whether your life genuinely improves. Right now, many people feel AI spending is crowding out other consumption.
— Miao YanliangAfter being replaced by his AI avatar, he began to feel anxious
China International Capital Corp created an AI skill encoding an analyst's expertise. One investor told him, ‘Now I don't have to bother you—I'll just use the avatar.’ He was pleased at first, but that night he couldn't sleep. He realized: now he'd be working for his avatar. Before, people could choose to reach out to him; now his avatar never sleeps, has no choice, works around the clock. He has to keep feeding it data, training it, upgrading the corpus. His students suggested he treat himself as the avatar's product manager, engaging in continuous iteration. The two could engage in mutual spiraling and co-evolve.
— Miao YanliangThis round of global imbalance ultimately stems from AI
Here's the counterintuitive frame: this round of global imbalance is not a traditional macro problem at all. It's an industry problem. It's an AI problem. America's massive AI capex inflates investment spending; the boom in AI-linked stocks drives consumption through wealth effects. The result: savings shrink, investment swells, the savings-investment gap widens, which forces the trade deficit to expand. China's strong export performance this year? A meaningful chunk is AI-related exports. To understand today's global imbalance, you need first to understand AI, not exchange rates and fiscal policy.
— Miao YanliangIn their own words · checked verbatim
Sometimes he jokingly tells me—or rather, sometimes he suspects—that South Korea's monetary policy may not be set in South Korea but in the US.
他有时候跟我开玩笑说 他有时候怀疑说 韩国的货币政策 也许不是在韩国制定的 是在美国制定的
Miao Yanliang17:50
I say the logical chain cannot be too long—if it is, there's something called Murphy's Law: if anything can go wrong, it will go wrong. So if your logical chain is that long, every step has the potential for anomalies, so it's very likely to have problems.
我说逻辑链条不能太长 太长的话 就有一个叫做莫非定理 如果有任何事情会出错的话 它一定会出错 那你逻辑链就那么长的话 那你每一步都有可能会出现异常 所以它就很有出问题
Miao Yanliang22:40
I think the safe-haven status of US debt is developing cracks, and global investors are demanding more reasonable risk compensation.
我觉得美债的安全资产地位 出现了裂纹 全球投资者要求一个 更合理的风险补偿
Miao Yanliang34:00
What's the anxiety? It's this: wow, from now on I'll be working for my avatar. In the future, people won't say you're no good; they'll say your avatar is no good—which means you're no good—because your avatar is no good.
焦虑了什么呢 就在于说 哇 从此以后 我要给我的分身打工 以后人家不会说是你不行了 人家会说你的分身不行 就是你不行 因为你分身不行了
Miao Yanliang43:00
Someone said global imbalance is not a macro problem—this round of global imbalance is an industry problem, a sectoral problem, an AI problem.
就有人说全球失衡 就不是个宏观问题 这一轮的全球失衡 是个产业问题 是个行业问题 是AI问题
Miao Yanliang52:00
Figures
| Total household RMB deposits | over 170 trillion yuan | 14:55 |
| This round's US 10-year Treasury yield range | rose from 4.5% to 5.3%, now back to around 5% (vs nominal growth around 6%, still meets R<G) | 28:19 |
| US gold reserves as share of total reserves | approximately 70%-80%, about 8,000-plus tonnes of gold | 30:50 |
| China's gold reserves as share of foreign exchange reserves | less than 10% | 31:05 |
| Microsoft layoff scale | approximately 60,000 people, approximately 30% of existing headcount, severance of 8-39 weeks' salary | 55:55 |
| AI capex as share of US GDP | expected to run approximately 3-4 percentage points annually over the next decade | 51:00 |
Glossary
- R<G formula
- A formula for assessing government debt sustainability—when interest rates fall below nominal growth, debt-to-GDP ratios won't spiral out of control.
- Convenience yield
- The below-market financing cost premium that US Treasuries enjoy because they are the world's safest and most liquid asset.
- Paradox of thrift
- The macro paradox in which individual rationality in saving leads to collective income decline.
- Negative beta
- An asset whose price rises during crises and can be used to hedge risk.
How to listen
Investors, founders, and macro research enthusiasts tracking how the dollar cycle, US debt sustainability, and AI capex reshape the macro landscape.
The opening's methodological discussion of general equilibrium theory is academic; you can skip directly to the content after the dollar tides section.