A bombshell and nobody noticed it. For the first time, the International Monetary Fund has set a date for the moment when the “Age of America” will end and the U.S. economy will be overtaken by that of China.
IMF sees China topping U.S. in 2016
According to the latest IMF official forecasts, China's economy will surpass America's in real terms in 2016 — just five years from now. That is alot closer than you thought, if you thought about that at all. It provides an urgent and sad context for the budget fight taking place right now. It raises enormous questions about what the international markets are going to look like in just a few of years. And it casts an ominous cloud over both the U.S. dollar and the Treasury market, which have been propped up for decades by their privileged status as the liabilities of the worlds leading super power and economy. According to the IMF forecast, which was quietly posted on the Fund’s website just two weeks ago, whoever is elected U.S. president next year — Obama? Mitt Romney? Donald Trump? — will be the last to preside over the world’s largest economy. Most people are not prepared for this. The government is not prepared for this and the last thing we need when this happens is to have the incompetent American apologist as the President.
China’s economy will be the world’s largest within five years or so.
We have lived in a world dominated by the U.S. for so long that there is no longer anyone who remembers anything else. America overtook Great Britain as the world’s leading economic power in the 1890s and has never looked back. And both these countries have similar rules of constitutional government, respect for civil liberties and property rights. China has none of these, The Age of China will feel very different. The Age of China will be very different.
IMF sees China topping U.S. in 2016
According to the latest IMF official forecasts, China's economy will surpass America's in real terms in 2016 — just five years from now. That is alot closer than you thought, if you thought about that at all. It provides an urgent and sad context for the budget fight taking place right now. It raises enormous questions about what the international markets are going to look like in just a few of years. And it casts an ominous cloud over both the U.S. dollar and the Treasury market, which have been propped up for decades by their privileged status as the liabilities of the worlds leading super power and economy. According to the IMF forecast, which was quietly posted on the Fund’s website just two weeks ago, whoever is elected U.S. president next year — Obama? Mitt Romney? Donald Trump? — will be the last to preside over the world’s largest economy. Most people are not prepared for this. The government is not prepared for this and the last thing we need when this happens is to have the incompetent American apologist as the President.
The comparison that really matters
In addition to comparing the two countries based on exchange rates, the IMF analysis also looked to the true, real-terms picture of the economies using “purchasing power parities.” That compares what people earn and spend in real terms. Just 10 years ago, the U.S. economy was three times the size of China’s. This is the end of the Age of America. As a bond strategist in Europe said two weeks ago, “We are witnessing the end of America’s economic hegemony.”We have lived in a world dominated by the U.S. for so long that there is no longer anyone who remembers anything else. America overtook Great Britain as the world’s leading economic power in the 1890s and has never looked back. And both these countries have similar rules of constitutional government, respect for civil liberties and property rights. China has none of these, The Age of China will feel very different. The Age of China will be very different.
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