Masters in Business · Oct 9, 2026 · 1h 9m · 53m saved
With Maria Vassalou, Head of the Pictet Research Institute
Maria Vassalou says the dollar system the world has run on since the Cold War holds together for one reason: the US leads in technology. China is now seriously challenging that lead.
Most debate about US debt is about the numbers: the deficit, the interest bill, the debt-to-GDP ratio. Vassalou's research at Pictet treats it as a geopolitical question first, and she said the real test of whether the US can carry its debt is whether it stays ahead of China in innovation.
"So for the US to maintain its leadership in technology and innovation is not an ego-driven pursuit. It's really existential in nature, and I think this is what a lot of people are missing." — Maria Vassalou
Maria Vassalou, Head of the Pictet Research Institute, on Masters in Business, taught finance at Columbia for 11 years, ran a quantitative strategies group at Soros Fund Management, was a portfolio manager at SAC Capital and was co-CIO at Goldman Sachs Asset Management before joining Pictet in January 2024 to build its research institute from scratch.
The full interview is covered here so you can skip it. 1 hour 9 minutes of audio, 16 minutes of reading.
Here are the 14 insights that matter.
Key Takeaways
The US can carry its debt only as long as it leads in technology, Vassalou said
China is now seriously challenging that lead
She thinks the decisive period is the next five years, not the next 10
China controls the inputs to new technology even where it does not lead in innovation
Successful investments now have to pass three tests: productivity, demographics and infrastructure
Europe's productivity has been close to zero, and it lacks the cheap energy that automation needs
The split between developed and emerging markets is becoming obsolete
Today's rates are normal; today's debt is not, she said
In Japan most of the debt is held at home, and in the US foreigners hold a far larger share
There is no obvious alternative to the dollar, because China does not want the renminbi to play that role
The past is a worse guide to the future than it was 25 years ago
1. Academia to Global Macro
Vassalou studied economics at the University of Athens and took a PhD in financial economics in London, then taught finance at Columbia from 1995 to 2006. By her account, she was one of the first European PhDs an Ivy League school had hired.
Hedge funds came to her because her research sat where macroeconomics meets asset prices
"So I was always working on this intersection of macro and finance, which at that time was not a very big area." — Maria Vassalou
Her first consulting client was a smaller Connecticut hedge fund. She then became a retained consultant at Citadel, spending one or two days a week in its Chicago offices. Citadel wanted her full-time, but she said she was "very scared to leave academia."
Soros gave her small amounts of capital to test each strategy, and it grew to about $200 million
Robert Soros, then the CIO, told her to take $20 million to try one strategy and $30 million to try another.
"And at the end I was managing about 200 million for them, which was not a lot of money for Soros, but it was an opportunity for me to dip my toes into the markets and start seeing how things work, and the strategies were quantitative in nature." — Maria Vassalou
When she left, she took her code to SAC Capital, where she ran her own team as a global macro portfolio manager. The host listed the rest of her career: head of quant at Soros, consultant to Citadel, head of asset allocation at McKinsey, portfolio manager at Perella Weinberg and co-CIO at Goldman Sachs Asset Management.
