President Obama makes a U-Turn

[The Ruescher Empire]

lol the Chinese will rule over everything eventually Well not rule over so much as becoming the primary super power. China is simply assuming a position in the world it once had and should never have lost. The fact that the West and the US have remained on top for so long is unusual.

[Sabastos]

I don't know if I completely agree with that. I think they will become a Superpower (if they aren't already) because of their market potential alone and the fact they're literally financing the West right now. They'll overshadow Japan for sure. The US will slowly lose its status like the UK did over the last several decades. I used to think The EC would become the Us's replacement, but I'm not so sure anymore.

[The Ruescher Empire]

Technically China was always the center of the world in terms of technology, innovation, wealth, and power. It was only in the last 400-500 years that the west became supreme (and that more to China refusing to advance rather then the West beating them).

Technically there is only 1 superpower at the moment, the US. China is considered a secondary power (along with Britain, France, and so on). Technically China overshadows all nations except the US and EU (it passed Japan and Germany a while ago).

And you're right, China will overshadow the West as its populace becomes middle class. It will take time, but it is only a matter of time

[Basileus Romanus]

They will eventually start to reach the US in terms of the size of their economy and get close to us in GDP. I say this because as China develops a stronger middle class, their GDP and per capita will start to increase while at the same time the US per capita starts decreasing. China could probably accellerate this process if they completely rid themselves of communism. Some people say the Chinese dabbling in capitalism is hypocritical of them. I think they're actually experimenting in a hybrid form of communism (or capitalism). We'll see. Yah, I agree they have always been on top of the world in many things. They started falling apart in the 19th century because of European powers (especially the poms who dumped this these fun little seeds and created an addiction epidemic).

[The Ruescher Empire]

China will never develop a GDP per capita close to the West. There is simply too many people in the nation for that to happen. Real GDP will grow and so will its middle class. Likely it's middle class will overshadow the entire US GDP.

They were falling apart long before the 19th century. Burning the books didn't help either

[G-Tech]

Realistically China is dabbling in what could be called an autocratic capitalist system... think Egypt under Mubarak. Basically they want the economic power that comes with the (mostly) free market, but to still maintain their power.

Though I have to agree with TRE on the oddity of the West being the world's leader for the last couple centuries. China had issues with anarchy, which mainly explains their decline, but now they're unified and coming back to their Middle Kingdom status of great power with a vengeance.

[The Ruescher Empire]

To be honest China will keep going to become the world's super power unless that is they become democratic, at which point they will be mired in corruption and inaction like India

[Seussamania]

In a New Age economy, what would you expect? I honestly believe that it's the government's responsibility to help guide market corrections when the market is unable to correct itself. That is the core idea of Keynsian Economics. The only functional (not necessarily the best) way to do this is to inject capital into the markets and its main players. Remember that property speculators and too much easy access credit are to blame for the bursting bubble. Yes, there is some truth to your post about things related to your reference of "currency wars" At some point we have to pay these things back, but it's not as critical as perhaps in previous economies working under the Gold Standard and Bretton-Woods agreements. As long as the U.S. economy starts to recover and continues to generate consumption (which will also create additional production), we shouldn't have too much to worry about.

The value of the dollar is just following a similar cycle with other reserve currencies. We'll need not worry until an acceptable and suitable alternative to the dollar is created and other countries start to abandon the dollar for this other reserve currency. But there is no other alternative acceptable at the present time. At first the Euro was gaining on the dollar in this area, but the Euro has its own set of problems. Why do you think the U.K., Denmark, Norway, Sweden, and other countries opted out of the Euro? Even Greece with all their problems is considering going back to the Drachma. So, we will have to see what happens.

[The Ruescher Empire]

There is so much wrong with Keynsian economics I don't even want to get into it. I will say only this, capital injections directed by populists decisions will never work. Saving GM? Horrible idea. Saving the banks? Ditto. You want to avoid catastrophic economic disturbances? Then actually take the necessary steps to prevent them. Shocking i know! Canada dealt with its banking problem in the early 1900s. The great depression? We didn't lose a single bank. America? 9000. And yet did they do anything to fix it? Not really no, they are still having issues.

Also the Euro will work just fine when Germany gets its way. A centralized monetary group that controls the issuance of bonds for the whole of the Eurozone. United States of Europe would be fantastic (though they would need a much better name )

[Adriaticus]

TRE! You really did your homework! Impressive. But you never cease to amaze me! However...I did a term paper in a macro econ course I took a couple semesters ago about the effects of the Depression (compare/contrast) on each side of the Atlantic.

Banks in Canada were in a much better capital situation than the banks in the US. Also, the Canadian market's volume was not nearly the volume in the US. Using economies of scale there was less "loss" in Canada in part because of lower volume activity in the market and the Canadians were much more cautious with market speculation, buying stock on margin, and commodity futures. In other words, our wonderful neighbors to the north recognized the dangers of using futures and margin buying while we ignored them. These things were not enough to reduce the econ slow down. The fact that an unhealthy percentage of Canada's export market went to the US actually helped pull them down further.

The banks in Canada--even thought better capitalized--actually aggrevated efforts to stimulate the economy, which led to the creation of the Bank of Canada in 1934 (or was it '35). Tight-fisted, overly cautious banks and over reliance on the US for its exports were the main reasons that led to a change in govt. Enter the Progressive Conservative, right? Of course, the govt at the time followed the same pattern of non-intervention in the economy that Hoover and the Fed Reserve followed in the US. It was disasterous in both countries. US and Canada had the highest unemployment and worst recovery performance in the world. Even the UK started to see growth of 83% of 1929 output levels in 31-32 compared to the 53% and 58% levels for the US and Canada respectively in the same period. Don't know why I remembered that...

[Imperator Rex]

"Don't know why I remembered that..." I bet! What a coincidence.