The news this year that China's economy is now larger than the United States' continues to reverberate on the conservative side of the political spectrum. Some argue that the only way to arrive at China having the world's largest economy is to use a purchasing power parity (PPP) basis, rather than a U.S. currency normalization.  This is correct, but PPP is also the correct way of looking at the situation.  The currency markets are simply too volatile and influenced by a host of confounding factors to yield the most reliable comparisons of GDP between nations and their associated trends. But the remaining piece of the discussion is the difference in per capita GDP between China and the USA.  Some excellent analysts with whom I normally agree have argued that “despite China's new status as the world's No. 1 economy by one IMF measure, the US is still 74 years ahead on a per-capita basis.” I'd argue this appears unlikely....(Read Full Post)