I’m # 1, you’re # 2…

Any parent who watched the last Muppet movie will now have that tune stuck in their head for the rest of the day (our apologies), but something else should stick in your head too… China just overtook the US as the biggest economy in the world.  The International Monetary Fund (IMF) just released the latest numbers for the world economy and taking national economic output in “real” terms (using the purchasing power parity measure) of goods and services, China will this year produce $17.6 trillion compared with $17.4 trillion for the U.S, that is an incredible 16.5% and 16.3% respectively.  So meteoric is China’s rise that it was a third the size of the US as recently as 2000.  The significance?  Well history shows very clearly that economic power dictates political and military power.  China has been overt in its desire to limit its accumulation of more US debt, expand the global use of its Renminbi (Yuan) in lieu of the USD, and likewise its strategic BRICS alliance with Brazil, Russia, India and South Africa, but most noticeably Russia.  China has also been on history’s biggest gold buying binge (swapping USD paper for real money) over the last few years (check out yesterday’s special post on this).  Makes you wonder what they have planned for it huh….?  Sometimes a picture (below) paints a thousand words..