2/6 This is the point I have been making again and again over the years. The global economy is a closed system, and it must balance. This means that domestic imbalances created by countries that control their external accounts must...

3/6 necessarily be exported to and absorbed by those of their trade partners that chose not to control their external accounts. It also means that the latter must end up with domestic imbalances that accommodate the domestic imbalances of the former.

4/6 If China's strategy is to continue expanding its share of global manufacturing, and the US strategy is no longer to accommodate that expansion but instead try to reverse the decline in its share of global manufacturing, some other country must accommodate these policies by...

5/6 giving up manufacturing share. This is just arithmetic. As Joan Robinson explained, when some major economies control their external accounts and others don't, the resulting beggar-thy-neighbor imbalances will eventually force the latter into protectionism.

6/6 That's why the only stable trading systems involve either a)all countries choosing global integration over economic sovereignty, b)penalties against countries that use trade to export their domestic imbalances, or c)all countries controlling their external accounts.

Perhaps, but it did this by passing most of the adjustment costs onto workers and that politically is unsustainable. We need a flexible money system along with a trading regime that penalizes beggar-thy-neighbor trade imbalances.