Trapped by the international dollar standard

摘要

In 2004, the world economy showed robust economic growth. Among the industrial countries, the United States led the way with annual growth of about 3.7%. Among developing countries, China enormous growth of 9.5% stimulated economic activity throughout East Asia. India grew about 6.6%-well above population growth and its own past history. More astonishingly, after languishing for more than two decades, Latin America's growth averaged 5-6%. True, the euro area and Japan are lagging, with annual growth averaging less than 2%, but elsewhere the world economy is quite buoyant. So it might seems strange, even churlish, to talk about a distortion in the international dollar standard. Nevertheless, America's saving deficiency - large fiscal deficits by the federal government, and meager household saving coupled with a virtually unlimited line of credit on which to borrow in dollars from the rest of the world - is distorting the world's economy in two important ways.