NEW YORK — In 2010, economic conflict between the United States and China became one of the most worrying global developments. The U.S. pressed China to revalue the renminbi, while China blamed the U.S. Federal Reserve policy of "quantitative easing" for currency market turmoil. The two sides are talking past each other even as both are making valid points.

The global imbalances that were at the root at the Crash of 2008 have not been corrected — indeed, some have grown larger. The U.S. still consumes more than it produces, running a chronic trade deficit. Consumption remains too high, at nearly 70 percent of gross domestic product, compared to an unsustainably low 35.6 percent of GDP in China. Households are over-indebted and must save more.

The U.S. economy needs higher productivity, but U.S. corporations, which are operating very profitably, are accumulating cash instead of investing it — with quantitative easing aimed at heading off deflation.