When Bruce Greenwald first explained the net importer of capital and net exporter of capital argument at the Columbia Business School class reunion and its implications on the US dollar, I didn’t get it at all. But Michael Pettis at China Financial Markets does a decent job of explaining why the Chinese will keep on buying US Government Treasury bills and why that would still result in a higher US dollar, higher US asset prices and lower interest rates in the US economy. Professor Pettis also goes ahead and list the net impact of multiple alternate Chinese strategies on US Government Treasury bill sales. These include China buying alternate USD assets, China doing large scale commodity purchases and China buying non-US denominated real assets. If you follow the interaction between two largest economies on the planet, the piece is a must read.