*** It seems persuasive that, given the size of the U.S. current account deficit, a diminished appetite for adding to dollar balances must occur at some point. But when, through what channels, and from what level of the dollar? Regrettably, no answer to those questions is convincing.
The gold standard, which had been suspended during World War I, was painstakingly rebuilt in the 1920s. Unfortunately, the reconstructed gold standard had a number of serious problems. 1  See Mervyn A. King (2012), “Talk to the Economic Club of New York,” speech delivered at the Economic Club of New York, December 10, http://econclubny.com/events/Transcript_MervynKing2012.pdf.