Posting this in WA rather than Econ to give it wider readership. Any guppers have a take on what is detailed in this article? So should we expect a big devaluation in the USD? Why should China come to USA rescue?
Look at the “ominous parallels” chart - scary?
And also:
" …
From the peak in this cycle, February 2002, through September 2004, the dollar has fallen only 23%. The current account is now approaching twice what it was when it finally bottomed in 1988. So if we use the current-account “adjustment” as a guide, we should multiply the 42% decline by a factor of two to determine just how far the dollar must fall before solving the current-account problem - that’s 84%!
It may seem silly to conceive of the world’s reserve currency, the US dollar, falling that much. But if we consider there is little else on the horizon other than a fall in the dollar to help rebalance this situation, an 84% decline starts to look more plausible.
…"
http://www.atimes.com/atimes/Global_Economy/FJ14Dj01.html