Ten years ago China had a much smaller economy and had not yet joined the WTO.

Today it has the second largest economy in the world, and is continuing to grow, while the US, the largest economy and most powerful in the world, has a shrinking economy, and is burdened with debt. Its power is waning.

How did this happen?

Following the 9/11 attacks in 2001, the Bush administration decided to embark on a GWOT (Global War on Terror). But because the US's economy was frail then, he decided not to raise taxes, instead relying on debt financing. To stimulate the economy and get Americans to shop, taxes were cut. In 2002, his treasury secretary, Paul O'Neill, advised against this policy, saying that it would lead to unsustainable debt for the US. Forced into a confrontation with Dick Cheney, the war hawk, O'Neill was forced to quit his position. Some of this debt was financed by China through its purchase of US treasuries.

In November 2001, China joined the WTO. This meant that the rapid growth phase of China's export machine started, making it the factory to the world. Many of the exports went to the US, where Americans were treating their home equity as an ATM; all the pundits told them that real estate prices would continue to go up. From 2002 to 2008, China's exports grew rapidly. Wherever you went, products had "Made in China" labels.

As more Americans bought Chinese products, American factories laid off US workers, increasing the number of US unemployed.

In the meantime, the US embarked on military adventures in Afghanistan and Iraq which cost some US$6T by 2011.

The system broke in September 2008 because subprime mortgages, which were financed by the US banks and Fannie Mae and Freddie Mac basically collapsed. The world economy very nearly ground to a halt.

China's government injected nearly US$1T into the Chinese economy at the end of 2008 to keep the export machine growing. In 2009, the Chinese export machine continued to work, while the rest of the world slowed down. By 2011, it is showing signs of slowing down, with high inflation hitting food prices.

Here are the unintended consequences:

• Bin-laden planned to hurt the US with 9/11, but we don't know whether he planned on hurting the US through terror attacks, or economically.
• The Bush and Obama administration had chosen to take a very narrow interpretation of the threat from al-Qaeda, looking at it only from the war POV.
• While the US govt, media and public focused on the war, they took their attention away from the financial and economic repercussions of cutting taxes while fighting a multi-front war on terror. Cheney belittled this threat saying that "Reagan taught us that debt doesn't matter."
• Because the US needed to keep its economy going, this opened up an opportunity for China to grow economically, and expand its influence.
• The subprime mortgage crisis was triggered by the over-expansion of debt through financial instruments no one understood, the least of all being the ratings agencies, who should have known the most.
• Indirectly, Bin-Laden and al-Qaeda made it possible for China to get breathing room and grow.
• The amount of debt the EU and US are carrying is enormous; the interest payments for future generations almost certainly can't be paid off.
• If it was Bin-Laden's intention for the US to become overstretched economically, militarily, and bringing about US decline in the process, he succeeded, and both US administrations since then have stumbled into the trap, while China has grown. If you accept this interpretation, Bin-Laden achieved his aims, even though he was killed in May 2011.