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

Chimerica
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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