Page 13 - CSA Speaker Bulletin September 2016 | CSA Celebrity Speakers
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In Crisis

Richard Duncan is a financial analyst and author.
He has written three books on the global economic
crisis, including the international bestseller, The
Dollar Crisis. He is now the publisher of the video-
newsletter Macro Watch.

Chimerica is a term coined by              into a severe recession. If it does,  so large that it has become unstable
           the historian Niall Ferguson    the global ramifications will be      domestically and destabilizing
           in 2006 to describe the         devastating.                          internationally.
 economic relationship between the
 United States and China. Ferguson         Before 2008, US credit growth         With China now slowing sharply and
 wrote: “Think of the United States        drove the Chimerican economic         the US unlikely to rebound, Chimerica
 and the People’s Republic not as two      engine, while Chinese money           is shifting from being the driver of
 countries, but as one: Chimerica.         creation financed the US debt. That   global growth to being a drag on
 It’s quite a place: just 13% of the       arrangement was turned upside         growth and a source of destabilizing
 world’s land surface, but a quarter of    down after 2008. In absolute terms,   deflation. In 2015, Chimerica’s
 its population and fully a third of its   Chinese credit growth has been far    imports contracted by 9%. Exports
 economic output.”                         larger than US credit growth since    fell by 4%. Chimerican central bank
                                           2008. Moreover, the Fed has joined    assets shrank by 5%. Credit grew
 Indeed, looked at this way,               the PBOC in printing trillions of     by only 4%. This hard landing has
 Chimerica is the greatest economic        dollars, thereby greatly reducing US  already dealt a severe blow to the
 superpower the world has ever             reliance on China to finance the US   global economy.
 known. Chimerican GDP is now $28          government’s budget deficits.
 trillion – 36% of world GDP. Total                                              Further deterioration is likely. The
 credit in Chimerica is more than $85      The Chimerican relationship is        weaker Chimerican growth becomes
 trillion and Chimerican central bank      becoming increasingly frayed for      the more strained US-Chinese
 assets are nearly $10 trillion. Without   a number of reasons, the most         relations will become. If Chimerica
 question, Chimerica has transformed       important among these being: 1)       ends in divorce involving trade tariffs,
 the world.                                the United States is no longer        a global depression will follow. The
                                           economically strong enough to keep    consequences could be catastrophic,
 Chimerica is now on the brink of crisis,  up its end of the bargain; and 2)     both economically and politically. n
 however. It is at risk of collapsing      China’s economic bubble has grown

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