Analysis Of The Global Economic Imbalances And The Dollar Standard

Global economy imbalance has become the world significant hot spot. Its main performance lie in US' s huge and increasing current account deficit, as well as the extremely low savings ratio. Simultaneously, other countries including the Eastern Asian emerging economies have higher savings ratio and large current account surplus. In this essay, we will mainly discuss the relation between US dollar standard system and global economy imbalance.Through inspecting into the evolution of American economy and US dollar, we may discover US dollar standard have been the leading role in the international monetary system, which started from the Bretton woods system. Not only this system is nature monopoly with economies of scale, US dollar also acts a main character in the present economy moving. Therefore, the existing US dollar standard system has its inevitable character.However, US dollar standard system has also inevitably made global economy to be unbalanced, because it not only enables the Triffin Dilemma to be solved, also is a realistic choice of international coordination mechanism. Moreover, when gambling with outer world, backgrounded by the asymmetric superiority of US dollar, US has the motive to make imbalance. In history, regardless of the pound standard system or the US dollar standard system, the imbalance phenomenon occurs repeatedly, which also explain the monetary standard can undoubtly turn out the imbalance.Although America has weak motive to correct global economy imbalance under US dollar standard, and American general government debt still has space to increase by the historical comparison, the global economy imbalance still needs urgent adjustment, because the imbalance is unsustained through the analysis of debt /GDP proportion and the foreign capital inflow. Furthermore, the imbalance also faces challenges like trade protectionism.When searching for the role of currency adjustment in correcting global economy imbalance, we may discover the depreciation of US dollar is essential. However, the effect of US dollar depreciation has not been deserved since the beginning of 21st century, because it lacks the coordination of tighten finance and monetary policy. What' s more, in order to correct the imbalance, besides the depreciation of US dollar, the international monetary policies coordination including initiative revaluation of Eastern Asian currency is also necessary.