OECD: China Economy to overtake US by 2016

[RNG]

A news story with this headline was reported by CNBC and reprinted in the Vancouver Sun this morning. And this worries me personally. My retirement income is dependent on the performance of Canadian businesses and our economy is still very dependent on the US as they are our largest trading partner in both imports and exports.

My fear is that the USD may lose it's reserve currency status which would then lead to the inevitable consequences of their massive quantitative easing including rampant inflation and skyrocketing interest rates. Iran is currently accepting yuan for their oil and there have been some oil trading in Euros.

China itself has significant debt and there is some fear of a similar bubble there, but given their success in artificially depressing the value of their currency any such fallout would be far less drastic than that which the US faces.

It must be trending. When I went back to google to find the CNBC link, it was now fifth down with

Discuss.'>this link first.

[TimG]

My fear is that the USD may lose it's reserve currency status which would then lead to the inevitable consequences of their massive quantitative easing including rampant inflation and skyrocketing interest rates.

Every country is facing serious challenges over the next 50 years. There is no reason to believe the challenges facing the US are any worse than the challenges facing Europe, China or India. If anything, the open economy of the US makes it better equipped to meet these challenges than any of the competitors.

Under some scenarios the population of the US will surpass the population of China around 2070 (because the US population is increasing due to immigration where as the Chinese population will start decreasing soon).

Edited March 23, 2013 by TimG

[RNG]

Every country is facing serious challenges over the next 50 years. There is no reason to believe the challenges facing the US are any worse than the challenges facing Europe, China or India. If anything, the open economy of the US makes it better equipped to meet these challenges than any of the competitors.

Under some scenarios the population of the US will surpass the population of China around 2070 (because the US population is increasing due to immigration where as the Chinese population will start decreasing soon).

A friend of mine is knowledgeable in economics. He strongly feels that thus far the US has escaped a lot of the pain the PIGS and such have suffered largely because of the reserve currency status resulting in helping keep inflation and interest rates low. Loss of the reserve currency status would cause them to suddenly "catch up to Europe" which would be a great shock to their economic system. If they could even show some intent to actually decrease their debt, rather than just trying to slow the rate of increase of debt, they might continue getting a pass. But given the current state of affairs and the fact that the Republicans keep shooting themselves in the foot with their possitions on rape/evolution/science and environment I don't see the Democrats losing. The Republicans only hope is to get a charismatic candidate for president that can muzzle some of the old white men.

[TimG]

Loss of the reserve currency status would cause them to suddenly "catch up to Europe" which would be a great shock to their economic system.

In order for the US to "lose" its reserve currency status another currency would have to be a better option. In order for China to be that option it must make its currency fully convertible and provide a must more open banking system.

It is possible that China will do this over the next 20 years but it is also possible that the US will come to terms with its financial problems as well. All such talk is speculation and the world will likely unfold in ways that no one living today expects.

Edited March 23, 2013 by TimG

[Shady]

I don't see the China economy overtaking the American economy by 2016. I also don't see their currency being used in place of the American dollar. They'd have to cease their currency manipulation first, and that would undermine their growth.

[RNG]

I don't see the China economy overtaking the American economy by 2016. I also don't see their currency being used in place of the American dollar. They'd have to cease their currency manipulation first, and that would undermine their growth.

The US government itself has the same view, just on a different time frame.

WASHINGTON, Dec 10 (Reuters) - China's economy is likely to surpass

the United States in less than two decades while Asia will overtake

North America and Europe combined in global power by 2030, a U.S.

intelligence report said on Monday.

"Meanwhile, the economies of Europe, Japan, and Russia are likely to continue their slow relative declines," it said.

The report, "Global Trends 2030: Alternative Worlds," was issued by

the National Intelligence Council, an analytical arm of the U.S.

government's Office of the Director of National Intelligence. In

addition to U.S. intelligence analysts, the report includes the views of

foreign and private experts and can be seen here.

From http://www.huffingtonpost.com/2012/12/10/china-economy-surpass-united-states_n_2271781.html

When I first saw this story it was atributed to the State Department.

[Pliny]

A friend of mine is knowledgeable in economics. He strongly feels that thus far the US has escaped a lot of the pain the PIGS and such have suffered largely because of the reserve currency status resulting in helping keep inflation and interest rates low. Loss of the reserve currency status would cause them to suddenly "catch up to Europe" which would be a great shock to their economic system. If they could even show some intent to actually decrease their debt, rather than just trying to slow the rate of increase of debt, they might continue getting a pass. But given the current state of affairs and the fact that the Republicans keep shooting themselves in the foot with their possitions on rape/evolution/science and environment I don't see the Democrats losing. The Republicans only hope is to get a charismatic candidate for president that can muzzle some of the old white men.

Reserve currency status affords them some privilege as everyone else has to hold some of their currency in reserve. So I agree with your friend.

Obama doesn't seem to care a wit about economics. His philosophy is redistribute the wealth, from which he derives his

policy of tax the rich and spend on entitlements.