"But if you add up all the excess saving being thrown out by the surplus countries, from China to Germany, the US is soaking up three-quarters of it right now," he said.
For Rogoff and several other economists, the question is not whether the dollar declines -- but how fast and how far the fall turns out to be.
The US current account deficit, which encompasses annual trade as well as the balance of financial flows, has gone from zero in 1990 to nearly US$600 billion this year. The US' accumulated debt to foreign investors is US$2.6 trillion, or 23 percent of the annual output of the economy.
But where foreign investors in the 1990s poured trillions of dollars into American stocks and corporate acquisitions, investment from abroad now comes mostly from foreign central banks and goes heavily to buying Treasury securities that finance the federal deficit.
Catherine Mann, a senior economist at the Institute for International Economics in Washington, said today's financing gap can be expected to widen. Part of the problem lies with Europe and Japan, which grow more slowly than the US and import less than they export.
Higher costs of imported oil will aggravate the trade deficit even more, Mann said, and the federal government will be paying foreigners higher interest rates on its rapidly growing debt.
"You have a dynamic that links government deficits to current accounts deficits more than has been the case before," Mann said. "We are going to have a lot of government securities out there, and a very high share of those Treasuries are owned by foreign investors."
But where Rogoff predicts that the dollar will slide sharply over the next two years, Mann predicts that Asian countries will continue to subsidize American imbalances to keep their economies growing. A decline in the dollar may be likely, but not a panicky flight by foreign investors.
ups and downs
The American dollar has been through several ups and downs in recent decades. In 1973, it fell sharply against Japanese and European currencies -- the major industrialized countries had already abandoned the system of fixed exchange rates adopted at Bretton Woods after World War II.
The dollar rebounded strongly in the early and mid-1980s in response to higher American interest rates, but then plunged 40 percent after leaders from the US, Japan and Europe reached the so-called Plaza Accord in 1986 to nudge the dollar back down.
The plunge after the Plaza Accord caused few disruptions for Americans, and foreign investors did not demand higher interest rates on securities.
"One theory is that investors were simply irrational," said J. Bradford DeLong, a professor of economics at the University of California, Berkeley. "Others said it was the result of what Charles DeGaulle called the `exorbitant privilege' of being able to repay your debts in your own currency."
Some economists contend that the US can postpone its day of reckoning for years. Richard Cooper, a professor of economics at Harvard, said the global pool of savings was about 10 times the US' appetite for foreign capital last year and growing fast enough to easily finance US$500 billion a year.
The wild card is that most of the money is coming not from private investors but from foreign governments, led by Japan and China. Rather than profits, their goal has been to stabilize exchange rates and keep their exports from becoming more expensive.