Science, Innovation, Politics
China is definitely rising but have you looked at the potential bumps in the road? Is some of the major cities, housing prices are 22 times earnings. In the US, home prices over the long term average are ~3x household income and during the housing bubble, it did not get much beyond 6x earnings. What kind of creative finance is supporting China's housing bubble and what affect will it have on their GDP growth when it bursts?
I'd be more interested in a PPP comparison rather than MEX. But I'm not holding my breath. Remember only a few years ago the question was when will the Japanese economy surpass the US.
Hi,In this calculation, a higher inflation rate in China produces a faster overtake of the U.S. economy.If that were true in the real world, the Weimar Republic and present-day Zimbabwe would be paradises. ;-)http://www.cato.org/zimbabwe
Hi Roger,I made this comment, but it got lost.The calculation system has higher inflation in China contributing to China catching the U.S. sooner. If that were true in the real world, the Weimar Republic and modern-day Zimbabwe would be paradises.http://www.cato.org/zimbabwe
Will?Shouldn't the question be When?Especially as the US, judging by California's performance, appears to be intent on comiting economic suicide with its carbon taxes!
markbahner putting in higher inflation is one thing, but that would surely mean yuan depreciation.
"markbahner putting in higher inflation is one thing, but that would surely mean yuan depreciation"My point was that inflation should not be counted as a positive influence on the size of the economy. The real size of the economy should be discounted for inflation.So essentially, all that is needed is the "Real GDP growth" value, since real GDP growth would be adjusted (downward) for inflation.For example, suppose nominal GDP growth was 10% per year, but inflation was 4% per year. Then real GDP growth would be 6% per year.As the unfortunate souls living in Zimbabwe can attest, high inflation rates do not mean that the economy is growing.
"My point was that inflation should not be counted as a positive influence on the size of the economy. The real size of the economy should be discounted for inflation."Which is precisely why a PPP based GDP valuation is much more meaningful than MEX. The question is not how many dollars you can buy with a yuan, but how many yuan it takes to buy a Big Mac locally with your yuan and also how long it takes you to earn those yuan.
"The calculation system has higher inflation in China contributing to China catching the U.S. sooner."-- It also says higher inflation in the U.S. has China catching up to the U.S. sooner.-- It also doesn't allow inflation rates of more than 10 percent.-- It also presumes China's economic stats (and the U.S.'s) are reliable.-- And it presumes there won't be any major event that disrupts those trends.The Economist has given us a nice widget to play with, but it shouldn't be taken seriously.
The whole calculation is a typically daft, overoptimistic projection from economists who didn't even see this correction coming in the first place. The US gdp could easily flatline or even decrease, since the previous gdp growth came largely from external debt. At some point either a huge payback or a default must happen and in any event a continuing depreciation of the dollar will occur. The only outlook for gdp growth i see is if the US really does develop that shale oil/gas in appreciable amounts or if they come up with revolutionary green tech that. Is that what the optimism is based on or is it just more promises and piecrust?