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It’s official: America is now No. 2

Discussion in 'Financial Cents' started by Quigley_Sharps, Dec 4, 2014.

  1. Quigley_Sharps

    Quigley_Sharps The Badministrator Administrator Founding Member

    It’s official: America is now No. 2 - Yahoo Finance


    A Chinese national flag flutters in front of the headquarters of the People's Bank of China, China's central bank, in central Beijing, May 16, 2014. REUTERS/Petar Kujundzic/Files
    Hang on to your hats, America.

    And throw away that big, fat styrofoam finger while you’re about it.

    There’s no easy way to say this, so I’ll just say it: We’re no longer No. 1. Today, we’re No. 2. Yes, it’s official. The Chinese economy just overtook the United States economy to become the largest in the world. For the first time since Ulysses S. Grant was president, America is not the leading economic power on the planet.

    It just happened — and almost nobody noticed.

    The International Monetary Fund recently released the latest numbers for the world economy. And when you measure national economic output in “real” terms of goods and services, China will this year produce $17.6 trillion — compared with $17.4 trillion for the U.S.A.

    As recently as 2000, we produced nearly three times as much as the Chinese.

    To put the numbers slightly differently, China now accounts for 16.5% of the global economy when measured in real purchasing-power terms, compared with 16.3% for the U.S.

    This latest economic earthquake follows the development last year when China surpassed the U.S. for the first time in terms of global trade.

    I first reported on this looming development over two years ago, but the moment came sooner than I or anyone else had predicted. China’s recent decision to bring gross domestic product calculations in line with international standards has revealed activity that had previously gone uncounted.

    These calculations are based on a well-established and widely used economic measure known as purchasing-power parity (or PPP), which measures the actual output as opposed to fluctuations in exchange rates. So a Starbucks venti Frappucino served in Beijing counts the same as a venti Frappucino served in Minneapolis, regardless of what happens to be going on among foreign-exchange traders.

    PPP is the real way of comparing economies. It is one reported by the IMF and was, for example, the one used by McKinsey & Co. consultants back in the 1990s when they undertook a study of economic productivity on behalf of the British government.

    Yes, when you look at mere international exchange rates, the U.S. economy remains bigger than that of China, allegedly by almost 70%. But such measures, although they are widely followed, are largely meaningless. Does the U.S. economy really shrink if the dollar falls 10% on international currency markets? Does the recent plunge in the yen mean the Japanese economy is vanishing before our eyes?

    Back in 2012, when I first reported on these figures, the IMF tried to challenge the importance of PPP. I was not surprised. It is not in anyone’s interest at the IMF that people in the Western world start focusing too much on the sheer extent of China’s power. But the PPP data come from the IMF, not from me. And it is noteworthy that when the IMF’s official World Economic Outlook compares countries by their share of world output, it does so using PPP.

    Yes, all statistics are open to various quibbles. It is perfectly possible China’s latest numbers overstate output — or understate them. That may also be true of U.S. GDP figures. But the IMF data are the best we have.

    Make no mistake: This is a geopolitical earthquake with a high reading on the Richter scale. Throughout history, political and military power have always depended on economic power. Britain was the workshop of the world before she ruled the waves. And it was Britain’s relative economic decline that preceded the collapse of her power.

    And it was a similar story with previous hegemonic powers such as France and Spain.

    This will not change anything tomorrow or next week, but it will change almost everything in the longer term. We have lived in a world dominated by the U.S. since at least 1945 and, in many ways, since the late 19th century. And we have lived for 200 years — since the Battle of Waterloo in 1815 — in a world dominated by two reasonably democratic, constitutional countries in Great Britain and the U.S.A. For all their flaws, the two countries have been in the vanguard worldwide in terms of civil liberties, democratic processes and constitutional rights.
  2. mysterymet

    mysterymet Monkey+++

    Work harder. Millions on welfare are depending on you.
  3. Yard Dart

    Yard Dart Vigilant Monkey Moderator

    WW3 right around the corner with China & Russia....... [dunno]
  4. toydoc

    toydoc Monkey+++

    I somehow doubt the validity of this. Google "ghost city's of china" to see how they may be skewing the numbers.
  5. Mindgrinder

    Mindgrinder Karma Pirate Ninja|RIP 12-25-2017

    What you shouldn't doubt is that this has been obvious since ya'll stopped PRODUCING things and let short term corporate gains through outsourcing and offshoring outweigh the national NEED for REAL jobs.

    Do you seriously doubt this?
    What is MADE IN AMERICA these days?
    1 in 10 or MORE are on food stamps...
    Your borders are wide open....
    The world no longer trusts you and especially despises your foreign policy....
    nathan, Dawg23, Sapper John and 3 others like this.
  6. Yard Dart

    Yard Dart Vigilant Monkey Moderator

    I can not disagree with that......
    Mountainman likes this.
  7. Mountainman

    Mountainman Großes Mitglied Site Supporter+++

    Was about to say the same but you nailed it!
    Dawg23 likes this.
  8. mysterymet

    mysterymet Monkey+++

    Usually I am not a big fan of MG but he hit the nail on the head with this one.

    I ticks me off when i heard people say "we are a post manufacturing economy transitioning to a service based economy". That just means more low paying low skill jobs because gvt has killed off our manufacturing. We cannot survive as a nation like this. We are too large to be a service based economy and have any kind of standard of living.
    nathan, Mountainman, oldawg and 2 others like this.
  9. VHestin

    VHestin Farm Chick

    My 'joke' about this is the only thing made in America these days is Chinese food...
  10. Mindgrinder

    Mindgrinder Karma Pirate Ninja|RIP 12-25-2017

    I wish I could brag aboot how much better Canadians are but we are not.
    The only thing keeping us producing anything at all is our vast natural resource EXPORTS...
    Oil, coal, heavy metals, fertilizer and food - MUCH of which we export to....
    Drum roll.....

    'merica is still our biggest trading partner but that is steadily changing.

    When Barry stalled on the Keystone pipeline, China raised it's hand and said:

    "We come build big port and whole pipeline to coast, buy all, no need refine.
    We bring own worker for cheap, you give visa paper, we like Vancouver. Liquid
    natural gas? Sure we build that pipe and buy all too. It's no problem. Can
    give iphone, ipad, galaxy, tv, computer, whatever you need. Have gold? Ya we
    can buy all too. We can buy much more than USA. Forget USA. We can bring
    worker to do it all, your people love it! No need work! We do all!
    Just watch tv play internet and take low tax on export to China only and no to USA.
    Want deal? We can start now, today.
    Some our people already in Fort Mac, Vancouver and Calgary."

    You are right about the "service based economy" too.
    Seriously though - how can either 'merica or Canaduh turn it around when our youth don't even want to work?
    It's gone man....it's done. It would take a generation of starvation and very real adversity to rebuild our nations work ethics and real "communities".
    This won't happen because there is a global vision - led by China, for almost all service jobs to be automated.
    You would think in a perfect world, life would get easier when robots do the work but that's not whats gonna happen. In 20 years there won't even be a real human military in any major super power....
    What's gonna happen when China starts building Ipredator Drone 2.0 instead of ipad?
    They could build 1 for every man woman and child in 'merica in 6 months.
    That's what I'm most afraid of.

    - rant - #tldrprollysorry
    kellory, oldawg, mysterymet and 2 others like this.
  11. mysterymet

    mysterymet Monkey+++

    Not a rant at all. You are spot on there. Also, china has been hacking our r&d facilites in this country and stealing our research. This happened to the company i work for. They are in it to win it while we don't even realize we are in the middle of an economic war. Also, i agree 100% the younger generation right now is a bunch of lazy, entitled crap heads. Attentipn young people: show half an ounce of intelligence and work ethic and employers will snap you up in a heart beat! Holy crap, this is like one of chris nutall's stories...
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