The U.S. resident population is growing at about 1% per year, while Chinese foreign-exchange reserves have compounded at 30% per year during this decade.
That reinforces, for the Chinese as well as ourselves, that we're both in this together.
But those big numbers can be taken as predictions that our incomes will grow.
Your share of the tab -- same as mine -- is $3,333; ditto for every member of your family. This number falls out of the facts, reported last week, that the population resident in the U.S. passed 300 million on Oct. 17, and that Chinese foreign-exchange reserves are reaching $1 trillion U.S. equivalent. Only about 70% of that is estimated to be invested in U.S. securities, so the number I cited as your share is significantly overstated. Sorry if I shocked you.
Round numbers are more eye-catching than their lumpy, inelegant cousins, even if not necessarily more meaningful. This particular set is interesting in many ways. That $3,333 tab is equivalent to roughly 7.5% of per capita GDP, or about 42% of currently outstanding consumer indebtedness or, by coincidence, about the same share of U.S. federal government revenue.
We could get out from under that Chinese debt overhang -- our share and, sportingly, the rest of the world's -- by increasing our per-person bank borrowings by two-fifths, or amplifying federal government receipts by that same factor. If you know how to do that without using a forbidden three-letter word, call your favorite political candidate.
The U.S. resident population is growing at about 1% per year, while Chinese foreign-exchange reserves have compounded at 30% per year during this decade. Maybe we'd better let the rest of the world look out for itself.
U.S. Residents Now Number, Roundly, 300 Million
These facts are somewhat less in-your-face than Kim Jong-Il's nuclear bomb test, but like that test they reinforce, for the Chinese as well as ourselves, that we're both in this together. Fortunately, the latest indications are that China's leaders are beginning to move in the direction of U.S. positions regarding North Korea. On the indebtedness question, China's leaders have long understood, probably better than our Congress, the mutual benefit of managing the relationship so as not to upset stability.
$1 Trillion Is the Big Round Number of China's Reserves
Currencies Currency Count in China 10/4/2006 8:39 AM EDT It's got two systems -- how many are really needed?
Media Economy May Hum Until Demographic Wreck 10/9/2006 2:29 PM EDT We may have a much longer, smoother expansion than ever before, but a fiscal crisis is looming.
Media Market Seems Inattentive to Midterm Elections 10/16/2006 1:52 PM EDT Most commentaries harp on the latest from the Fed but barely touch on what could be a watershed election.
Market Commentary Fed May Need to Retune Brake System 8/21/2006 2:00 PM EDT It may have to shift away from measured moves and transparency in order to foil speculation.
Market Commentary Encouraging Echoes of Cycles Past 8/14/2006 1:36 PM EDT The market's gloom is worse than its performance so far, and the outlook is brighter than most see.
Market Commentary The Manipulations People Play 10/4/2006 10:05 AM EDT For those who manipulate the energy and stock markets, it comes down to a supply game.
Jim Griffin is economic consultant and portfolio adviser to ING Investment Management and its Hartford-based unit, ING Aeltus, which manages institutional investment accounts and acts as adviser to the ING Mutual Funds. His commentary on the financial markets is based upon information thought to be reliable and is not meant as investment advice. While Griffin cannot provide investment advice or recommendations, he appreciates your feedback; click here to send him an email.
RSS FEEDS
PODCASTS
