The Relative Decline of the Western Economies
Many of us have a sense and concern that China (and even India) are on a path to overtake the U.S. and other western countries in economic might. There is a real basis for that concern, as reflected in actual GDP per capita and other important indicators.
Perhaps the most striking of the objective indicators in Ferguson’s presentation is this: In 1968, the per capita GDP in the U.S. was 33 times that of China. By 2008, that ratio had declined to 5:1. Think about that, particularly considering how many Chinese there are.
Ferguson examines the effects on these trends caused by recent stimulus and quantitative easing actions taken by western governments. It has made things worse. Much worse. The collective debt problems of western governments have put is in critical care.
Take a look at slide 29 in Ferguson’s presentation, where he cites the Congressional Budget Office. The CBO has stated that to merely stabilize our debt to GDP problem, the government must either decrease “all adult benefits” by 12.5% by 2015 or increase “all taxes” by 11%. If we wait until 2025, those percentages increase to 26%! This is from the CBO, the in-house experts that Congress pays to tell them the truth.
Ferguson also notes that China is extremely wary of inflation imported from the west, caused by our quantitative easy (flooding the economy with new money). As a result, China is slowly but steadily decreasing the amount of U.S. treasury securities that it owns.
The “sovereign debt crisis” is real. I encourage everyone to review Ferguson’s slide show (linked below) and then share it with your Congressperson. They will likely ignore it unless you make it clear that your vote is at stake.