Remember the 'J-curve' from your school economics course? As the dollar trudges ever lower and the US trade deficit balloons to new records, it's a question worth asking. This text-book theory holds that over time, a declining currency may actually worsen a country's trade deficit for the first year or two, before eventually narrowing it.
In the early stages, people keep buying foreign goods at the same rate despite higher import prices, and foreigners continue to buy about the same amount of a country's goods despite lower export prices, leading to an even wider trade deficit, the theory goes.
But eventually higher import prices dampen demand for imports and lower export prices lead to higher exports, narrowing the deficit, the textbooks say.
Yet the latest trade figures show the dollar's steady three-year depreciation against a basket of major currencies has failed to prevent the US trade deficit from ballooning to unprecedented levels.
"The traditional 'J-curve' is not playing out in the US," said Phil Suttle, global strategist at JPMorgan in Washington.
Typically, it takes around 18 months for the J-curve's corrective effects on a country's trade imbalances to be seen, but Suttle and other economists point to several reasons why this is not the case this time around.
Globalisation, the Internet and sophisticated hedging techniques have limited the impact of exchange rate swings on companies' and countries' balance sheets in recent years.
Cut-throat competition and a greater ability to protect against exchange rate volatility means companies have had to accept whittled-down profit margins rather than pass on price increases to consumers and effectively price themselves out of foreign markets.
Exporters in the euro zone and Canada, for example, have been forced to accept these realities as their currencies have appreciated markedly against the dollar in recent years.
Also, the dollar is coming down from what many say were extremely overvalued levels inflated by the late 1990s asset bubble. So compared to the mid-1990s, the dollar's current value isn't all that weak, some argue.
So will the 'J-curve' theory eventually apply to the US?
"I don't know if I believe in that any more," said Peter Moricci, professor of business at the University of Maryland. "We haven't had a J-curve for a while."
The latest US trade data would appear to confirm that. The deficit - the difference between what the country imported and exported - swelled to a record $60.3 billion in November.
In that month, the dollar was at its weakest level on a flows-weighted basis in nine years, a record low against the five-year-old euro and near five-year depths against the yen.
But many observers another currency holds the key to unlocking the US trade problem: the Chinese yuan.
China accounts for around 25 percent of the entire US trade deficit and as long as Beijing keeps its currency closely pegged to the dollar, it's likely to grow further.
"It changes the picture: all kind of rules don't matter any more," Moricci said of the peg.
China's fixed exchange rate of around 8.28 yuan to the dollar, in place for almost a decade, is now perhaps the single most crucial element in the trade and economic relationship between the US, Asia and the rest of the world.
As the dollar has weakened, the yuan has followed lower against every other currency, keeping it competitively cheap and giving a huge boost to China's exports, a large chunk of which goes to the insatiable US consumer.
China's economy is growing so fast that the dollar inflows from these booming exports are huge. Add to this strong foreign direct investment inflows and it's easy to see why China's foreign exchange reserves soared to a whopping $610 billion at the end of last year, up $207 billion from a year earlier.
In order to maintain the currency peg and stave off upward pressure on the yuan, China recycles these billions of dollars into US bonds.