Studying these global balances helps understand and predict where the stresses of financial systems build.
To this end, Brad’s re-opening post from November 2022 is a foundational read.
The short summary – deficits are back to pre-GFC highs, have concentrated in autocratic regime countries but with none of the historic reserve growth.
Prescient conclusion – “By implication, private financial intermediaries somewhere around the world will need to absorb Treasury bonds. Just as financial intermediaries globally had to absorb U.S. “subprime” (household) risk prior to the global crisis, now they have to absorb U.S. interest rate risk.”
