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Bernanke Finds a Flaw

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In Brief...

That was quite a speech by Ben Bernanke in Frankfurt, Germany today, blame being laid at the feet of just about everyone but the U.S. central bank for the growing problems in the global economy and international monetary system that, in the end, he concludes has a structural flaw whereby exporting countries are not forced to correct their trade surpluses.. ), there is clear finger pointing at China and other Asian nations as the proximate cause of the world's troubles, namely, their refusal to let their currencies appreciate against the U.S. dollar.. That would be, in order of culpability for the world's troubles, Singapore, Hong Kong, Taiwan, Thailand, and, of course, everyone's favorite currency manipulator - China.. And, interestingly, he concludes with a reference to how a similar structural flaw in the gold standard led to the Great Depression: For example, in the somewhat different context of the gold standard in the period prior to the Great Depression, the United States and France ran large current account surpluses, accompanied by large inflows of gold.

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