East Asian capital flow and world financial stability

What we’ve seen in the last couple of decades in China is the largest migration in human history, in terms of magnitudes of people. [...] Now, the question is, “Is this a new sort of Bretton Woods system, the fixity in East Asia that we’re seeing, where the central country, the United States, facilitates the process by having large current account deficits?” Some of you may have heard of the so-called Triffin problem, where if the issue was to supply dollar reserves as a world currency, then the United States needed to run current a [...] So for Germany, they were selling the Deutsche Mark, the French were selling the Franc, and the Japanese were selling the Yen. [...] In that case, you could imagine a gradual adjustment in the U. S. current account deficit and the surplus of China and Japan; that is, you’d get exchange rate adjustments, similar to what you’ve seen in the last year and a half, where the dollar has depreciated rather significantly. [...] If you think of investment in this case, let’s say the investors are nervous about a fall in the dollar, so they stop buying dollar assets and as a consequence, their action of not buying dollar assets, in turn causes a fall in the dollar.