I question which I have been surrounded with as of late, is that of, will the United States of America still be an economic super power in 2050? With surmounting debts racked up during the Bush Administration, a bulk of it being owed to China. Along with a number of financial crises involving big American MNCs like AIG, Lehman Brothers and Bear Sterns to name a few, the future looks bleak for America's stranglehold on the global economic front.
USA Today
USA has the biggest economy in the world, according to the International Monetary Fund (IMF) statistics as of April 2010, valued at an estimated US$14.7 trillion dollars. However, they are not the richest country in the world and are currently ranked 7th by GDP (PPP) per capita. As of 10th May 2011, according the US Debt Clock, they are US$14.3 trillion dollars in debt. (Accessed 10th May 2011) They are responsible for the Sub-Prime Credit Crisis in 2008, in which we saw a national bailout for AIG, the bankruptcy of Lehman Brothers and brought about a recession globally. Due to the current situation, it is highly unlikely that USA will continue to hold its position as an Economic Superpower in the year 2050. Reasons for this assumptions are as discussed below:
Online information from the White House shows a $553 billion defence budget about 4.3% of the national GDP. (Accessed 10th May 2011) This amount could be used to pay off its global debt or help its people but is used instead to service a war budget of which does not seem to be sated in the near future.
An article from Seeking Alpha (2007), ‘A Closer Look at Euro Currency Trading’ says global banks have cashed in American dollars in favour of Euros. (Accessed 10th May 2011) Demand for Euro has resulted in it strengthening and a weak dollar creates import and export problems with rapid fluctuations affecting international dealings in US currency.
The Economist (2008) article, ‘Revaluation by Stealth’ states China’s currency has been deliberately deflated and pegged to the US dollar by the Chinese government, rarely allowing the Yuan to go up in value. Right now the Yuan is worth about half or one-third of what at it should really be worth. An article by Hughes (2005), titled, ‘A Trade War with China?’ states that this is an unfair practice and the WTO has been pressuring China to allow their currency to float in an open market, but have been met with strong rejections.
Competition from emerging collective labour markets in Asia such as Laos and Vietnam makes it hard for USA to compete due to its collective strengths. Another major competition comes from Brazil, Russia, India and China also known as the BRICs. In a Global Economic Paper by Goldman Sachs, titled, ‘Dreaming with BRICs: The Path to 2050’, it states BRICs economies will be a much larger force in the world economy even surpassing the G6 in US dollars by 2050. Other factors creating more problems for America comes from Corporate Corruption and Crime like Enron, WorldCom and high bonuses paid to CEOs after the financial crisis of 2008. These has dropped the Investor Confidence Index (ICI) which measure the attitude of Americans to foreign investors to risk which was 99.3 in August 2007 to 48.0 in December 2008 as a result (State Street Global Markets, 2011). Lastly, with Inflation and Interest Rates as Laffer (2009) in, ‘Get Ready for inflation and Higher Interest Rates’ says such debts guarantees higher interests rates, massive tax increases and partial default on government promises.
Given the aforementioned facts, USA economic future looks sombre. By 2050, given the economic woes, which see USA unable to surmount, it looks set to lose its Superpower position to rapidly growing economic Superpowers such as China and India. With the devaluation of its dollar against most world currencies and its rising debt unsettled, USA night have to concede ‘defeat’ and relinquish its title to more prodigious nations who may come into economic wealth by then.
I personally do hope that USA manages to overturn the current state it is in, as USA to me represents the world as an official partner for the United Nations and have championed many noble efforts to aid people and countries in need. Especially, in aiding poverty stricken countries around the world, offering aid and sending diplomats to ease situations. Therefore, thus far given all its economic wealth and superiority it has continued to help out nations in distress, a nobel and valiant effort in which the USA can be commended for.
On a side note, looking at History, somehow you can see a distinct transfer of Powers and wealth constantly between the East and West. Looking at the (may not be in chronological order) Babylonians to Persians to Roman/Greek to Ottoman to Tzars to Hapsburg to the British Monarchy and recently USA being labelled a Superpower and now analysing it seems as though it is shifting back to the east with the emergence of China and India. By and taking into account what Nostradamus said in relation to these predictions, 'by studying the past you can predicting the future based on the fact that what happened in the past was bound to happen in the future again', a fairly simple theory to understand.
This is just a theory if you were to look at it from another point of view, which there can be no concrete evidence, but looking at Nostradamus's track record and history it really leaves you to ponder.
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