Fu Peng: Asset Differentiation amid Global Order Restructuring—Decoding the Underlying Logic and Future Trends of Productivity Games and Fiscal-Monetary Policy [Fu Peng Talks 16]

This year marks the tenth anniversary of Wallstreetcn’s annual column, “Fu Peng Speaks”! Season six of “Fu Peng Speaks” is fully upgraded, adding a new column discussion group for updates on Fu Peng’s latest market views & chart data analysis (first updates in the community) on top of the regular video content. In addition to the usual content, we’ve added online reading documents, daily trading focus briefings, noteworthy research reports, recommended e-book lists, and extended reading materials. You're welcome to ask questions and exchange views in the community for shared progress. Column subscribers can scan the QR code below to add an assistant and join the exclusive “Fu Peng Speaks” discussion group. Global Asset Divergence under the Reconstruction of World Order—Deciphering the Fundamental Logic and Future Direction of Productivity Game and Fiscal-Monetary Policy Watching the world from the trading desk, Fu Peng comments on finance and economics. This video was recorded on January 26, 2026. In this edition of Fu Peng Speaks, we focus on the core framework of productivity and productive relations, discussing the linkage between monetary and fiscal policy mechanisms. At present, the fiscal status of major economies like Japan, the United States, and Europe is drawing considerable attention, but the key to understanding these phenomena is to return to the core analytical framework of productivity, productive relations, and world order. From a global economic perspective, productivity has achieved phased breakthroughs, but the main contradiction this year lies in the yet-to-be-completed reconstruction of productive relations and world order. Currently, productivity development coexists with disorder in the world order, with productive relations in an unsettled state; this imbalance leads to a binary divergence in global assets. One group ties to productivity development, covering AI-related stocks, US equities, and the “Magnificent Seven”; the other reflects world order chaos, including war-related assets, precious metals, etc. Over the next 12-18 months, this asset structure will be transmitted and realigned, adjusting to a fit among productivity, productive relations, and world order. In the optimistic scenario, productivity will drive the reconstruction of productive relations, and global order will stabilize after experiencing phased chaos; in the pessimistic scenario, if productivity breakthroughs are disproved and new productive relations cannot form, world order will descend into turmoil—even facing the risk of a third world war. The core logic is that monetary and fiscal policy, as adjustment tools, can only be effective on the premise of a stable world order. Within the order-stable framework, the central goal of monetary and fiscal policy is to promote investment in R&D, enhance productivity, and optimize key elements of productive relations such as distribution mechanisms and debt leverage. This process involves three major sectors: government, enterprise, and households. Traditional macroeconomic studies of monetary and fiscal policy assume a stable world order. Specifically, monetary policy through rate hikes and cuts adjusts R&D investment and debt leverage in the three sectors, thereby impacting productivity and productive relations. Fiscal policy acts as a countercyclical adjustment when enterprise and household sectors face debt stagnation or risk, requiring the government to intervene. Factoring the three sectors with monetary and fiscal policy forms a comprehensive system that extends downward from the top-level triangle of productivity, productive relations, and world order—including money, fiscal, debt, and the three sectors. This system has been elaborated in “Resisting the Tide” (click for details). Today's world order disorder centralizes the core contradiction within the government sector. In the past decade, the effectiveness of monetary policy has continually weakened, giving way to fiscal policy; Japan is a typical case. After drastically lowering rates, Japan's monetary policy has become less effective. Coupled with the aftermath of the 1990 real estate bubble burst and debt crisis, the government has had to take on the responsibility of maintaining productivity in the household and enterprise sectors and optimizing productive relations, directly resulting in a sharp expansion of fiscal deficits. The essence of fiscal deficit risk depends on whether spending creates effective output. The government need not avoid debt itself; actively increasing leverage at critical moments is reasonable. The scale of debt is not the core contradiction—government credit worries stemming from world order chaos are key. Under current global disorder, the trends of precious metals and war-related assets fundamentally mirror concerns about fiscal sustainability. Fiscal policy sustainability ultimately has two pathways: effective or ineffective spending. Effective spending means government intervention stabilizes the functioning of enterprise and household sectors, ensures R&D and education for productivity, and optimizes debt leverage and distribution relations—in essence, stabilizing total factor productivity (TFP). Japan’s experience shows fiscal spending curbed steep TFP declines; from post-WWII to the post-bubble 1990s, TFP remained mainly stable. Abe’s “three arrows” policy further consolidated this by adjusting enterprise-household relations, albeit at the cost of continued government debt expansion. China offers a similar example: between 1995 and 2000, when TFP was on the verge of decline, Premier Zhu Rongji implemented bold reforms, using four asset management companies to strip bank debts and transfer financial risks to the government sector, successfully stabilizing the economic fundamentals. Argentine President Milei's reform follows this logic, aggressively revising productive relations. Thus, the combination of fiscal policy backstop and productive relation reform is key to effective expenditure and positive economic outcomes. Once fiscal spending yields effective output, even with expanded government debt, the reforms of productive relations and resultant productivity gains will gradually bring inflation back down, raise asset returns, create a virtuous fiscal cycle, and eventually stabilize the debt scale—the crux of debt is revenue-expenditure balance, where income growth from effective spending offsets debt pressure. The real risk is the imbalance of “spending without revenue.” Current world disorder essentially reflects stagnation in productivity and productive relations. In the past decade, major economies have fallen into this trap: post-2008 US financial crisis, huge balance sheet expansions; Japan continued fiscal deficits; Europe’s debt risks post-sovereign crisis; China’s local government debt rising. Government debt issues worsen, and the adjustment space created by low rates and government backstopping ultimately depends on AI-led productivity breakthroughs. If AI fails to ignite new productivity or reshape productive relations, previous monetary and fiscal policies will be disproven, government faces huge deficits that cannot become effective revenue, and debt-credit risk will break out. This cascade leads to bond yields surging out of control, rising government financing costs, persistently low investment returns, exchange rate swings not driven by interest differentials, and a “triple kill” in stocks, bonds, and currencies—assets are sold off due to lack of income support, and core assets like US stocks and the yen face sharp devaluation pressures. This risk is not limited to one economy, but is a global challenge. If major economies all fall victim, capital will lose safe havens and world order will deteriorate further. During the European debt crisis, capital exited crisis-hit southern Europe for the US, and only southern European nations saw bond yields surge; core nations like Germany and France faced limited impact. But today, yields are rising across core European nations, showing that risk has spread continent-wide. It’s widely expected Europe will increase defense spending or push reforms to combat crisis, but Europe’s main problem is not under-investment in defense—it’s a lack of productivity and lagging productive relations reform. In the AI wave, Europe is lagging and is slower on productive relations reform compared to the US. Globally, strategic priorities diverge: China chases the frontier of productivity while reforming domestic demand, cleaning up real estate risks, and adjusting old productive relations on a progressive path; the US has cleared subprime and internet bubble risks and now centers on world order reconstruction; Argentina, Japan, etc. focus on productive relation reform while following on productivity. Argentina’s case shows that if productive relation reform integrates into the new world order, monetary and fiscal policy can regain effectiveness. Currently, only the G2 (US and China) can adjust both productivity and productive relations simultaneously—the core problem is reconstruction of the global order. Europe has not reached a stage where fiscal policy is effective, the key barrier being the deep contradictions in intra-EU relations, political ecology, and ideology. The Davos Forum only revealed Europe’s long-standing issues, and its slow pace in correction and transformation means stabilization of world order awaits breakthroughs in both productivity and productive relations. Once order is stable and productivity/productive relations are adapted, government debt problems will naturally ease—income from effective spending will cover liability costs. This is also the heart of the debate between Justin Lin and Xie Guozhong: if large infrastructure investment and other fiscal spending, supported by productive relations reform, can generate effective revenue, debt is not an issue. China’s own reforms proved this—once old productive relations were adjusted, government capital spending successfully drove economic growth, confirming Lin’s view. This sharing did not focus on a single news event—because today's global economy is not about isolated incidents, but rather all phenomena nested within the integrated framework of productivity, productive relations, world order, and fiscal-monetary policy. Only by grasping this framework can one deeply understand global economic dynamics. That concludes my sharing, and I hope it sparks some thoughts. Risk Warning and Disclaimer Markets have risks, investment needs caution. This article does not constitute personal investment advice, nor does it take into account individuals' particular investment objectives, financial circumstances, or needs. Users should consider whether any opinions, views, or conclusions in this document fit their individual situation. If you invest based on this, you bear full responsibility.