And while the American current-account deficit is one important factor at work, others are tending to push in a different direction.

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So long as foreign investors favour American equities, then, its large current-account deficit will not drag down the dollar.

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Many American economists and policymakers have long argued that the current-account deficit does not matter.

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Instead, his legacy will linger in the shape of the biggest economic imbalances in American history: a negative household saving rate and a record current-account deficit (see chart 1).

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Whichever numbers you choose, central banks' increases in dollar reserves have been large compared with overall foreign purchases of American bonds, and huge compared with the size of the current-account deficit.

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The large deficit in the U.S. current account -- the broadest measure of American trade with the rest of the world -- is also a cause for concern.

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