The debate on “global imbalances” has gone back to the future. The proposal from Tim Geithner, the US Treasury secretary, to target the current account takes us back to the preoccupations of John Maynard Keynes at the Bretton Woods conference of July 1944. Keynes, representing Britain, was obsessed with the dangers of asymmetric adjustment between surplus and deficit countries. The US, then the world’s dominant surplus country, rebuffed calls for a mechanism that would impose pressure on both sides. Now the US is in the other camp.

Might China accept what the US rejected? The answer may be “yes”. The communiqué of the October 23 meeting of the finance ministers and central bank governors of the Group of 20 leading economies in South Korea stated that “persistently large imbalances, assessed against indicative guidelines to be agreed, would warrant an assessment of their nature and the root causes of impediments to adjustment as part of the Mutual Assessment Process, recognising the need to take into account national or regional circumstances, including [those of] large commodity producers.” This ugly sentence was in response to Mr Geithner’s suggestion of 4 per cent of gross domestic product as an indicator for the current account.

So what is the US after? Does its proposal make sense? Can it work?