If the U.S. cannot succeed in slowing China’s economy, then it can only decrease China’s lead in growth rate by increasing the percentage of net fixed capital formation in the U.S. economy.
The U.S. knows from its experience in defeating Germany, Japan, and the Asian Tigers that a decisive way to slow a competitors growth rate is to get it to reduce its level of investment. The problem for the U.S. is that it has no means to force China to reduce its level of investment.
The present global economic situation is largely defined by the by the extremely negative consequences of the U.S. stimulus programs.
These consequences are fully in line with economic theory.
Clarity on these economic issues is crucial.
US growth during the present business cycle is the slowest in any business cycle since World War II.
On Friday 2 February sharp turmoil, which had been building for some time, shook US financial markets.
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To assess the impact of the Trump tax cut on the US economy it is necessary to analyse the interrelation of two processes:
The determinants of US economic growth in the medium/long term,
The short-term position of the US economy in the current business cycle
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