Got a reply from Prof. Peter Morici already! And it’s quite interesting. His view is that one of the main contributors to the US current account deficit is the undervaluation of the Chinese Yuan. This is caused in his view by the Chinese government’s direct intervention to print Yuan and buy US dollars. He advocates directly taxing transactions with China to eliminate the artificial advantage Chinese manufacturers have exporting to the US. He says that when countries abandoned the Bretton Woods agreement that set international exchange rates and adopted floating rates, the major flaw was that there was no way to stop foreign governments intervening to unfairly advantage their own economies. I think makes a strong argument.
I did also pose a question for him about the NZ current account deficit, but unfortunately he didn’t react to that.