So Chanos may turn out to be wrong, but not for the reasons Friedman thinks he is.  This is probably a reasonable view.<p>Professor Pettis is also correct in asserting that the role of central bank reserves is one of the most misunderstood concepts in economics.  In fact, nowadays, almost any economic concept as it relates to governments or sovereign states are routinely misunderstood. Probably because that is precisely the part of the economy that the average person feels they understand so well.<p>For instance, many people worry, rightly by the way, about our USD1.4 Trillion deficit. They feel qualified to comment on its implications authoritatively since we can SORT OF understand the concept. Yet you see no publicly expressed concern at all over the USD500 Trillion house of cards that is the derivatives market. Very few people understand derivatives markets well enough to know the implications of this situation. I think this causes us not to think about it and to hope that someone else will deal with it before the bottom falls out.<p>Now understand that these guys are not average at all. I have attended Pettis' talks and he is definitely not average. But I think the same sort of intellectual dynamic goes on even in their circle.