Can Hank and Ben fix the world?

With the dollar sliding, and Treasury Secretary Hank Paulson and Fed Chairman Ben Bernanke on their way to China, more attention than usual is being paid to "global macroeconomic imbalances."

In the Washington Post, Sebastian Mallaby ponders whether world trade rules should limit the ability of countries to promote exports by keeping their currencies undervalued and Robert Samuelson looks at the unique role of the US dollar. The Economist argues that our fixation on China is misdirected.

A quick refresher on the relevant economics: A country's net exports are the difference between its national savings and investment - the large US trade deficit implies that national saving insufficient to finance domestic investment, while China and the oil exporters are saving more than they are investing domestically. Their "excess" saving flows to finance US investment. The surplus countries receive financial I.O.U.s (Treasury Bonds, Stocks, etc...) in return for the goods they send us.
If a government is intervening to keep its currency "undervalued" relative to its market equilibrium price there will be excess demand. The government sells its currency to meet the excess demand, thereby accumulating reserves (e.g. China is depressing the value of the Yuan by selling it cheaply for dollars, in doing so it is piling up a massive hoard of dollars). In the short run, a cheaper currency may increase exports by making them less expensive to foreigners.