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The resulting shift in liquidity is "one of the greatest transfers of economic activity and wealth in the past 100 years," says Mr Klein.
At the same time, the shift in liquidity from developed markets to such places as China and India, and the weak fiscal position of the euro-area countries present risks, the report stressed.
"We believe that any pickup in build activity should be sufficient to drive a shift in liquidity back into PC-oriented stocks, if only for the intermediate term," he said.
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The upheaval is simply a reminder that shifts in liquidity are felt not just through interest rates, but in risk appetites.
"Since market liquidity is prone to suddenly drying up, policymakers should adopt pre-emptive strategies to cope with such shifts in market liquidity," it says.
The dramatic shift in the FSA's policies towards liquidity means that treasury operations in banks are less likely to be treated as profit centres and could lead to criticism from the banking industry that the regulator is putting the City at a competitive disadvantage by having tougher requirements than apply in other countries.
"The effect of a shock on a vulnerability in the financial system — such as excessive leverage, funding fragility or limited liquidity — creates a radical shift in the markets".
He pointed out that differences in liquidity management are huge.
As of March 31, it had $24.5 billion in liquidity.
Since Thursday, the Fed has added $62 billion in liquidity.
It swims in liquidity today.
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