A current account deficit in 2004 of $ billion, a little more than 1.5 per cent of world GDP at current exchange rates, was absorbed with a depreciation of the dollar but without serious strains in the markets, in a year in which the world economy grew by 8 per cent in nominal terms and the demand for financial assets expanded even faster.
The quantity of dollars as defined by M2 increased by 38 per cent between 1999 and 2004; over the same period the stock of public and private-sector bonds grew by 45 per cent. The sum of the two aggregates rose to 260 per cent of America’s GDP.