The US dollar is no longer what it used to be. The logic behind the Bretton Woods system that first established the greenback as the international reserve currency, and thereby certified America's dominance in the global economy, no longer exists. Hence, it is time that the US dollar is shunned as the international reserve currency and replaced with an appropriate alternative. And the only currency that fits the bill is the Chinese yuan.
The American economy, having been mauled by the recent economic downturn, is struggling to get back on track. Though the Obama administration's financial stimulus has managed to stop the bleeding, there is still quite a long way to go before the American economy is restored to robust health. On the other hand, the economic downturn has resulted in a shuffling of the global order with Asian economies such as China and India emerging stronger than before.
There is no doubt that the Chinese economy today is the strongest in the world. Despite the global economic crisis, it posted an amazing 8.5 per cent growth in 2009. Beijing holds as much as $2 trillion in reserves and recently took a meaningful step towards greater monetary flexibility by letting the yuan appreciate vis-a-vis the greenback a move that could very well see the renminbi float free in the near future. It has also taken significant steps towards greater currency convertibility by undertaking currency swaps with several central banks such as those of Argentina, Hong Kong, Indonesia, etc. In such circumstances, holding on to a decaying greenback is absurd. It simply doesn't reflect reality. The global economy needs a strong currency to act as a stabilising force. With the dollar losing its heft, the world should consider the yuan as an alternative.
Allow me to doubt. The Chinese economy makes up less than 10% of the worlds GDP while the US constitutes about 25%.There is no doubt that the Chinese economy today is the strongest in the world.
Allow me to doubt. The Chinese economy makes up less than 10% of the worlds GDP while the US constitutes about 25%.
It's so obvious, I don't even know where to begin.How on earth does the size of an economy represent the strength of its economy???
Sure. And if Ireland's and Germany's GDP growth of the late 90s had continued for 30 years Ireland's would have surpassed Germany's economy in ABSOLUTE size in 30 years.The USA's economic size represents past economic power not future.
Wealth is moving East. It will take 20-40 years to complete.
It's so obvious, I don't even know where to begin.
Sure. And if Ireland's and Germany's GDP growth of the late 90s had continued for 30 years Ireland's would have surpassed Germany's economy in ABSOLUTE size in 30 years.
1 or 2 year economic predictions are almost impossible. 40 year predictions are ludicrous.
You completely missed the point. It wasn't a comparison - it was a demonstration of what sort of ludicrous conclusions are possible if you make the basic error of extrapolating current economic trends decades into the future.Poor argument comparing a nation of 4.4M population providing reasons why its GDP won't match that of a nation with 82M population.
You completely missed the point. It wasn't a comparison - it was a demonstration of what sort of ludicrous conclusions are possible if you make the basic error of extrapolating current economic trends decades into the future.
As a method of providing any sort of clue of the where the economy will be in decades, it has proven to be worse than useless; reading tea leaves or tarot cards has a better record.
So Darag, back to the point then, do you think the USA's economy is 'fundamentally' sound?
It is a fundamentally sound as China. China has as much problems trying to rebalance their economy away from a dependence on foreign consumption and improving their domestic economy as the US does with curing their deficit.
So 600% debt to GDP and a nation that produces little for the world; is better than a nation with massive foreign reserves to tie them over for many years and has no debt, who's fault is they do not consume much?
I don't think so.
Not really.So Darag, back to the point then, do you think the USA's economy is 'fundamentally' sound?