Rationalist Rationalist:
I'm not only talking about the BRIC countries growing, there's also going to be a contraction in the GDP of the US which will make the transition faster. When you talk about USA being wealthier than these countries, you have to remember what wealth is being measured in. Remember, when you measure GDP of a country it's generally done in US dollars. When you use the PPP measure you get a clearer picture. With the depreciation of the dollar, you will definitely see the exchange rates factor into the equation even more, and as the dollar declines against Asian currencies, by definition that is a transfer of wealth and purchasing power away from the United States and over to Asia. China's GDP in PPP is already 11 trillion, if you believe the IMF's figures. For every day that the exchange rate slides, China is getting slightly richer in comparison.
Saying that the savings rate is too high to foster domestic consumption doesn't make sense - if the supply is there, the demand will follow. It wouldn't surprise me if Chinese start to use their savings to purchase goods. That's besides the point, because it is easy to have a high savings rate and consumption. Consumption is the ends, not the means, of economic growth. As for Chinese politicians getting rich of the back of the people, I'm sure China has its share of corrupt politicians, but it's a pretty weird statement, considering the average Chinese politician lives a much less lavish life than the average American politician, who usually get high paying jobs in private companies after their term (look up "revolving door" as it applies to the Congress in Wikipedia). That kind of behavior would get a politician executed in China, and they have been.
Of course I don't think the political system in China is better than the US, but you have to realize that each one has its own separate flaws.
Contractions in the US economy are shortlived due to the fact that there is continous population growth. Remember, the US is expected to have another 100 million people by 2050, or a total of 400 million. Keeping productivity the same, the real value of GDP grows 33%.
PPP, is not a measure of currency, but rather compares the cost of certain items in that country. An example would be a loaf of bread costs $1.50 in the US, and the equivilent costs $2.00 in China. It doesn't neccessarly reflect the strength of the currency because products are priced in the local currency. Now when businesses begin to raise their prices, then the PPP value will change.
Not neccessarly true. Imagine the savings rate is like brake on the economy. Each time money changes hand some of it leaves the economy into savings. For example, how long would it before 80% of money would go into savings?
5% savings:
1 .95 .9025 .8574 .8145 .74 ....
It would have to change 31-32 times to get to that point.
40% savings:
1 .6 .36 .216 .1296
So 4-5 times
And think each time that money trades hands goes towards the GDP. Now there is nothing wrong with 40% savings, but everyone will have a pretty poor standard of living as there is still too many goods on the market. You would have to export those goods in order to bring money into the economy.
The Chinese system is where the local party officials are either owners of companies or receive bribes before work is done. Relatively, they live a much better lifestyle then the average Chinese worker. While corruption exists in the US, it would be foolish to say the levels are the same as China.
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