Today we had the opportunity to hear from Niall Ferguson, professor of history at Oxford, Cambridge, and Harvard, and author of many books, including “The Ascent of Money.”
His discussed his concept of “Chimerica”, the combination of China and America in trade, and how the financial crisis has changed that relationship. His talk was titled “Has the Crisis Speeded (sic) Up the Shift of Wealth from West to the East?”
A colorful speaker, he equated the current decisions before the Fed to be a battle of King Kong vs. Godzilla (deflation versus inflation). The world is changing, with China building submarines, Australia building submarines, China buying up large parts of Africa and Brazil for their commodities. The Fed will almost certainly have to raise interest rates to stem the fall in the dollar, but doing so will push inflation up and keep the U.S. in a recession even longer. He put up charts describing an “English-speaking country, recognized worldwide, with an excellent Navy, and investments all around the world, and the standard currency for the world.” Of course, he was speaking of Great Britian, and how it fell from its level of leadership in the world. His point was that, he believes it is likely that we are living in the last days of the primacy of the United States, and we are witnessing its fall, and the rise of a new world order.
The members of my living group, none of them Americans, did not agree with this assessment. They believe that the institutions in the U.S. are so strong that it is not possible for China, through sheer numbers and economic wealth, to overtake the U.S. in innovation, excellence in education, or skill in business management.
I guess we’ll see.
He's got some very prescient concerns. After reading Six Frigates I saw several parallels between the loss of British hegemony and the loss of our own. Admittedly, International Political Economists (IPE's) would argue we have already LOST our politico-economic hegemony and this is just more of the same, but that we have retained our CULTURAL hegemony. I guess time will tell.
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