Stephen Roach argues that the U.S. is not equipped to turn the Fed’s liquidity into domestic demand so the liquidity provided by quantitative easing will simply leak out abroad to form asset bubbles somewhere else. He is principally concerned with Asia here and suggests capital controls are one route to deal with this problem. Of course, the same is also true for Latin American countries like Chile or Brazil as well. Ultimately, for Roach this is about Asian countries moving away from a mercantilist economic policy toward one which is more driven by domestic consumption demand.
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Source: Roach: Federal Reserve creating ‘a tsunami of money’ – BBC News