savings glut

Our Dollar, Your Problem: An Insider’s View of Seven Turbulent Decades of Global Finance, and the Road Ahead

by Kenneth Rogoff  · 27 Feb 2025  · 330pp  · 127,791 words

rates than might otherwise be the case. The core contributions in the “Deutsche Bank trio” papers were famously memorialized in Ben Bernanke’s celebrated “global savings glut speech” in 2005, which drew heavily on their ideas.2 The Deutsche Bank trio’s message was that if Asia was to be accorded the

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in the Open Economy,” American Economic Review 106, no. 5 (May 2015): 503–507. This, of course, was also the point of Bernanke’s “global savings glut” speech and the “Deutsche Bank trio” papers discussed in chapter 16. 25. See “Large U.S. Bank Collapse Ahead, Says Ex-IMF Economist,” Reuters, August

Fixed: Why Personal Finance is Broken and How to Make it Work for Everyone

by John Y. Campbell and Tarun Ramadorai  · 25 Jul 2025

behavior is similar even at minority-owned dealerships and among minority car salespeople. 35. See, for example, Atif Mian, Ludwig Straub, and Amir Sufi, “The saving glut of the rich” (unpublished paper). 36. This is the behavior that Nobel Prize–winning economists George Akerlof and Robert Shiller call “Phishing for Phools” in

The Shifts and the Shocks: What We've Learned--And Have Still to Learn--From the Financial Crisis

by Martin Wolf  · 24 Nov 2015  · 524pp  · 143,993 words

to crisis was not due to what happened inside the financial system alone. Underneath it were global economic events, notably the emergence of a ‘global savings glut’ and the associated credit bubble, partly due to a number of interlinked economic shifts. A crucial aspect of this was the rise of the global

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interest rates fell to exceptionally low levels. This triggered an asset-price boom that then turned into a bubble. But also important in forming the savings glut was the changing distribution of income between capital and labour and among workers. The chapter will argue that popular alternative explanations of the macroeconomic causes

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of the crisis – loose monetary policy, in particular – confuse results with causes. Behind the rising imbalances and the associated savings glut lay fundamental shifts in the world economy driven by liberalization, technology and ageing, and revealed in globalization, rising inequality and weak investment in high-income

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economies. Chapter Five will also look at how the combination of the credit bubble with the savings glut and the underlying design flaws drove the Eurozone into such a deep crisis. It will argue that one must understand the interaction of five elements

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$6tn in sovereign wealth funds.8 The recycling of current-account surpluses and private-capital inflows into official capital outflows – described by some as a ‘savings glut’ and by others as a ‘money glut’ – was one of the causes of the crisis. These flows are certainly unsustainable, because high-income countries have

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credit boom caused by mistaken monetary policy. This is to confuse a symptom with a cause. The underlying cause was the emergence of a global savings glut (or, which comes to the same thing, investment dearth). The response of policymakers in a number of high-income countries was to tolerate – even encourage

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not cause it: it merely increased confidence before the crisis and removed certain adjustment mechanisms after it. When the financial crisis then broke, the global savings glut became far worse, as investment fell and former borrowers were forced to save: this is shown by the simple fact that the high-income world

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it had not, the high-income countries would surely have moved into a depression. The cause of this second and more severe manifestation of the savings glut was the unsustainable balance sheets bequeathed by the way policymakers had responded to the first manifestation, namely, allowing or even encouraging a credit boom. Making

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economics of the crisis is crucial. It notes, however, that those who agree on this advance two distinct views on what those macroeconomic roots were: savings glut and credit glut. These alternatives partly reflect different perspectives on how the economy works, differences that the crisis has brought out into the open. I

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economy since around 1980. THE SHIFT INTO THE GLOBAL SAVINGS SURFEIT Ben Bernanke, when still a mere governor of the Federal Reserve, laid out the savings-glut hypothesis in a speech he gave in 2005. In this he stated that ‘Over the past decade a combination of diverse forces has created a

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significant increase in the global supply of saving – a global savings glut – which helps to explain both the increase in the U.S. current-account deficit and the relatively low level of long-term real interest rates

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and capital imbalances, and it has unfolded in almost a text-book fashion.’9 In his speech, Mr Bernanke laid out three contributions to this savings glut. The first was the ageing of the high-income countries. But, he noted, that was a long-run condition, which had not changed in the

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higher prices greatly increased the surplus savings of oil exporters, at least in the medium term. The third and most important reason for the emerging savings glut was the reaction of emerging countries to the financial crises of the 1990s. In particular, they engineered surplus savings, as we saw in Chapter Three

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all, debt-creating flows. As a matter of definition, observed savings must equal observed investment. So how does one identify a savings glut? Indeed, why should one call it a savings glut, rather than an ‘investment dearth’? The answer to the second question is that one cannot. It is a matter of interpretation of

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the evidence. Often, it is more sensible to talk of an investment dearth than a savings glut. The answer to the first question is

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that one cannot identify the savings glut or the investment dearth directly. It can be observed instead in some combination of the reward for savings – that

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no strong recovery in demand. Figure 29. Central Bank Short-term Policy Rates (per cent) Source: Thomson Reuters Datastream In brief, Mr Bernanke’s global savings glut would be visible in a combination of two phenomena: weak economies and/or low interest rates. Today, this combination is precisely what we see in

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the high-income countries: ultra-low interest rates and recessionary conditions, with high unemployment. A global savings glut is also a condition of chronic excess supply. In a provocative recent book, Daniel Alpert, an investment banker, properly calls the present ‘the age of

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, thus defined, is consistent with substantial financial instability. That is one of the dilemmas addressed by this book.13 Thus, the simplest indicator of a savings glut in non-recessionary times is not the level of savings or investment. It is the level of interest rates or, more precisely, the level of

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, they do.17 THE SHIFT INTO THE GLOBAL IMBALANCES At the global level, then, a savings glut would show itself as a fall in the real interest rate. It has done just that. But a global savings glut is unlikely to be evenly distributed across economies. On the contrary, some countries are likely to

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crisis-hit countries – Indonesia, Malaysia, the Philippines, South Korea and Thailand.20 This was an ‘investment dearth’. Elsewhere, however, the phenomenon was more of a savings glut, particularly in Germany and the oil-exporting countries. In Germany, investment was weak, while profits and household savings were high. In the oil-exporting countries

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business sector ended up running a financial surplus after 2000, except briefly between late 2006 and late 2008. This was a big part of the savings glut. This left households and the government to run the deficits. In 2006 both were running financial deficits of around 3 per cent of GDP. President

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the ready availability of credit. This brings us to the underlying forces creating the global savings surplus and the emerging imbalances. SAVINGS AND CREDIT The savings-glut hypothesis is not the only explanation offered for the crisis. As Claudio Borio of the Bank for International Settlements argues, the rise in gross leverage

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is what central banks were told to do. And they did it. CREDIT BUBBLES AND MONETARY POLICY The argument here then is that the global savings glut and associated imbalances drove the policies of the monetary and, to a lesser degree, financial sector that created the credit glut. Many object that the

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similar lines, that US monetary irresponsibility explains what has happened.47 The arguments can be put into two groups. The first contains arguments that no savings glut existed and that the global imbalances were solely the consequence of mistaken monetary policies in the high-income countries, above all the US. The second

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contains arguments that monetary policy was too loose, whether or not there was such a savings glut: Mr Bernanke may have had the right analysis, but the Fed’s was the wrong response, made worse by the failure to regulate the financial

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system. On the question of whether a savings glut existed (indeed still exists), the answer has to be that it did: it can be seen in post-1997 real interest rates and in huge

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‘a massive global infrastructure initiative’ is a way of absorbing what he clearly recognizes as global excess savings.48 Mr Duncan does argue that no savings glut has ever existed. He insists, instead, that ‘most of the money those countries [East Asian surplus countries] invest in the United States is not derived

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2000s and again today are suggesting that fine-tuning the economy via monetary policy risks dangerous unintended consequence.51 This is correct. But, in a savings-glut world, not using monetary policy also has risks and costs. THE EUROZONE FINANCIAL CRISIS In the above discussion, I have focused on the US as

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be. That is the subject of Chapter Seven. Third, this leads the discussion to the big macroeconomic challenges. How should we manage a world of savings glut – or, which comes to the same thing, excess supply? Is there a real chance of secular stagnation and, if so, what might be done about

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recovery, though it almost certainly stopped a far deeper recession. The difficulty, as we saw in Chapter Five, is that the economy suffers from a savings glut – desired savings exceed desired investment, despite the extremely low interest rates. In the well-known expression: money is pushing on a string.47 Moreover, though

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high-income economies and so in the world. This necessitates both moving out of the post-crisis slump and away from the extreme private-sector savings glut revealed by today’s low real interest rates and chronic global imbalances. It also necessitates doing both of these things without a return to accumulation

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; the second is that the savings surplus of the corporate sector will need to be offset by spending elsewhere if a slump caused by a savings glut is to be avoided. Until the crisis, the offsetting spending was in the construction of homes and in household and government consumption. Then, after house

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are the questions addressed in this final chapter. WHAT HAPPENED? If we look at the debate on what happened, we find several explanations: a global savings glut and associated global imbalances; an expansionary monetary policy that ignored asset prices and credit; an unstable financial system; and naive, if not captured, regulation. This

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exchange controls. It used its position, to great effect, in 2008 and 2009, though the resulting credit boom created symptoms of financial fragility. The Global Savings Glut Thus, developing countries shifted into substantial aggregate current-account surpluses, led by the emerging colossus – China. Similar shifts into current-account surplus (by definition, a

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so low long-term real interest rates in a world economy characterized by rapid economic growth (see Figure 30).6 This, then, was the global ‘savings glut’ to which Mr Bernanke pointed, rightly, in the early 2000s. It might just as well be called a global ‘investment dearth’. In the short run

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, ultra-low real interest rates will raise the prices of long-lived assets, particularly real estate. In the longer run, a savings glut will generate ‘secular stagnation’ – a situation in which the equilibrium long-term real interest rate is negative, as was the case after 2008 and might

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such set of questions is how far the financial system should be integrated across frontiers. Another set of questions is how to end the global savings glut and associated imbalances. China has grasped the urgency of this point; but Germany and possibly also Japan have not done so. An important implication of

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macroprudential regulators and the monetary policymakers is precisely what one has seen in the UK in 2014. In other words, given the drivers of the savings glut – or, if one prefers, given chronic demand deficiency and so the threat of secular stagnation – internal balance (demand growing in line with potential output) would

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are quite likely (though not certain) to lead to an increase in the excess of desired savings over investment – a big problem during a global savings glut. One solution would be to abolish corporation tax and attribute all corporate income to shareholders. This would encourage higher distributions of profits. Alternatively, shareholders could

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the same, because inflation is assumed to be zero. In the real world, they are different. The interest rate relevant to the idea of a savings glut is the real rate (that is, the one after expected inflation). The interest rate set by the central bank is the nominal rate (usually very

Trade Wars Are Class Wars: How Rising Inequality Distorts the Global Economy and Threatens International Peace

by Matthew C. Klein  · 18 May 2020  · 339pp  · 95,270 words

trucks, living in the apartments, or needing the extra electricity. It is just waste.14 This explains how the world can be afflicted by a savings glut without having a high saving rate. The level of the saving rate by itself is meaningless. What matters is the amount of unconsumed output relative

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.org/2018/07/eu-income-inequality-decline-views-from-an-income-shares-perspective/. 66. Matthew C. Klein, “European Leaders Seem Determined to Remake the ‘Global Savings Glut’ on a Massive Scale,” FT Alphaville, November 8, 2017, https://ftalphaville.ft.com/2017/11/08/2195596/european-leaders-seem-to-determined-to-remake-the

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-global-savings-glut-on-a-massive-scale/. SIX The American Exception 1. Based on BEA, “International Transaction Accounts,” tables 1.1, 9.1, https://apps.bea.gov/iTable

The Price of Time: The Real Story of Interest

by Edward Chancellor  · 15 Aug 2022  · 829pp  · 187,394 words

decline in long-term US interest rates had improved mortgage affordability, thereby boosting house prices, but ascribed the fall in Treasury yields to a ‘global savings glut’ rather than the Federal Reserve’s actions. There are alternative explanations for the decline in long-term US rates (discussed in a later chapter).fn7

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Nevertheless, the savings glut hypothesis absolved monetary policymakers from blame for the subprime debacle and became a key part of mainstream explanations for the global financial crisis. Yet Bernanke

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. Secondly, it was claimed that new technologies required less investment capital and were less productive than hitherto. And thirdly, the world was witnessing a ‘global savings glut’. An excess of saving at a time of weak economic growth was said to explain the sharp decline in interest rates.fn2 As in the

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orthodox economics upside down, Borio rejected conventional accounts of the leading issues of the day. The financial crisis, he maintained, was caused not by a savings glut but by too much credit – a ‘banking glut’. When a bank makes a loan, he said, it conjures up deposits, spending power and even savings

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hours simply to maintain their standard of living.44 One of the most pressing concerns of the post-Lehman decade wasn’t so much a savings glut as an investment famine. Ultra-low rates were supposed to induce companies to borrow and invest. But despite the central banks’ best efforts, investment collapsed

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its history – a signal that the country was spending far more than it earned.9 While Ben Bernanke at the Fed warned of a global ‘savings glut’, the United States was suffering a dearth of domestic savings. After the housing bubble burst, consumers found themselves saddled with too much debt. The United

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years of this century witnessed a remarkable growth in central bank reserves. Conventional wisdom maintains that the accumulation of foreign exchange reserves indicated a ‘global savings glut’. Emerging markets were said to be amassing reserves in order to protect themselves against another Asian-style crisis. But the link between the growth of

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$12 trillion, up from $2 trillion at the turn of the century. (Since trade imbalances were shrinking, there was now less talk of any global savings glut.) Massive purchases of dollar securities by central banks put downward pressure on US Treasury yields. Foreign exchange interventions by central banks, combined with hot money

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the US level. The removal of the ‘iron rice bowl’ (the universal welfare policy of the Mao era) is often held responsible for China’s savings glut and massive trade surpluses. Yet the data show only a slight increase in household savings (as a proportion of GDP) after 1990, and most of

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, 2017). Bernanke, Ben, ‘The Fed’s Shifting Perspective on the Economy and Its Implications for Monetary Policy’, Brookings, 8 August 2016. Bernanke, Ben, ‘The Global Savings Glut and the U.S. Current Account Deficit’, speech at the Sandbridge Lecture, Virginia Association of Economists, 10 March 2005. Bernanke, Ben, ‘Why are Interest Rates

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: The Uneven Path toward Interest Rate Reform in China’, Journal of East Asian Studies, 11 (3), September–December 2011: 437–65. Shin, Hyun Song, ‘Global Savings Glut or Global Banking Glut?’, VoxEU, 20 December 2011. Shin, Hyun Song, ‘The Second Phase of Global Liquidity and its Impact on Emerging Economies’, in Volatile

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and R. Baldwin (London, 2014). 20. William Bernstein, ‘The Paradox of Wealth’, Financial Analysts Journal, 69 (5), September/October 2013. 21. Ben Bernanke, ‘The Global Savings Glut and the U.S. Current Account Deficit’, speech at the Sandbridge Lecture, Virginia Association of Economists, 10 March 2005. The question of the ‘global

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savings glut’ is considered in chs. 17 and 18. 22. John B. Taylor, ‘The Financial Crisis and the Policy Responses: An Empirical Analysis of What Went Wrong’,

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than their cumulative current account surpluses. Some of this difference can be explained by foreign direct investment and investment returns. 4. Hyun Song Shin, ‘Global Savings Glut or Global Banking Glut?’, VoxEU, 20 December 2011. 5. See Valentina Bruno and Hyun Song Shin, ‘Capital Flows and the Risk-Taking Channel of Monetary

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Law, 61; on monetary policy, 98, 98*, 115, 115*, 131, 155, 207, 230, 238; policy of dealing with aftermath of bubbles, 111–12, 114; and savings glut hypothesis, 128–9, 191; and taper tantrum (June 2013), 239, 256–7, 259, 263; and ultra-easy money after 2008 crisis, 124, 131, 133, 137

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, 255, 256; post-crisis capital flows into, xxiii, 253–9, 262–3; and recent phase of globalization, 260–61; recovery from 2008 crisis, 124; and savings glut hypothesis, 129, 268–9; ‘second phase of global liquidity’ after 2008 crisis, 253–9, 262–3; and taper tantrum (June 2013), xxiii, 137, 239, 256

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, 292–5, 297, 298; return to ‘yield-chasing’ after, 221–6, 230–31, 233–4, 237–8; the rich as chief beneficiaries of, 206–10; savings glut hypothesis, 115–16, 117, 126, 128–9, 132, 191, 252, 268–9; ‘second phase of global liquidity’ after, 253–9, 262–3; unwinding of carry

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, Duke of, 50–51, 52, 57 Samuelson, Paul, 246–7 Sarkozy, Nicolas, 292 Savills (property consultants), 174 saving: bonus of compound interest, 190; China’s savings glut, 268–9; as deferred gratification, 29, 188–90; and interest, xxiv, 44, 77, 188–93, 194–9, 205–6; interest as ‘wages of abstinence’, xxiv

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, xxv, 188–91; savings glut hypothesis, 115–16, 117, 126, 128–9, 132, 191, 252; Terborgh on, 125* savings & loan crisis, US, 111, 145 Say, Jean-Baptiste, 99 Sbrancia, Maria

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. ‘Declining population growth tends to reduce both the volume of saving and the proportion of this reduced volume available for capital formation.’ fn2 The global savings glut hypothesis is examined in chapters 17 and 18. 9: The Raven of Basel fn1 After 2008, the Federal Reserve signalled to the market its intended

The New Depression: The Breakdown of the Paper Money Economy

by Richard Duncan  · 2 Apr 2012  · 248pp  · 57,419 words

Percentage of Total Foreign Exchange Reserves Are Dollars? What to Do with So Many Dollars? What about the Remaining $2.8 Trillion? Debunking the Global Savings Glut Theory Will China Dump Its Dollars? Notes Chapter 3: Creditopia Who Borrowed the Money? Impact on the Economy Net Worth Profits Tax Revenue Different, Not

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Credit Slipped Its Leash, looks at the domestic causes. Chapter 2, The Global Money Glut, describes the foreign causes, debunking Fed Chairman Bernanke’s global savings glut theory along the way. Chapter 3, Creditopia, discusses how $50 trillion of credit transformed the U.S. economy. Chapter 4, The Quantity Theory of Credit

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Total Foreign Exchange Reserves, 1948 to 2007 Source: IMF Fed Chairman Ben Bernanke blamed the flood of foreign capital entering the country on a global savings glut. That is nonsense. The citizens of other countries did not save so much that they were unable to find profitable investment opportunities at home and

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fiat money. Alan Greenspan and Ben Bernanke have frequently attempted to explain the massive surplus on the U.S. financial account by blaming a global savings glut and by citing the overwhelming attractiveness of the U.S. financial markets relative to those elsewhere. The true explanation is that a dozen or so

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, thus increasing its vulnerability to the downturn that got underway in late 2007. Debunking the Global Savings Glut Theory It is necessary here to set aside a few pages to discredit Ben Bernanke’s global savings glut theory, which attributes the flood of foreign capital into the United States to the propensity of certain

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compelled to lend to the United States, thereby causing America’s massive current account deficit. That line of reasoning became known as Bernanke’s global savings glut theory. That argument ignores one very important fact: Most of the money those countries invest in the United States is not derived from savings. The

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many years. There has been a glut; of that there can be no doubt. But it has been a paper money printing glut, not a savings glut. Savers should not be blamed for saving the money they have earned. Central banks are to blame and should be held accountable for printing money

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financial health of in Mitchell’s theory of business cycles New Great Depression scenarios and Bank of America Baruch, Bernard Bear Stearns Bernanke, Ben: global savings glut theory of on Milton Friedman policy responses to credit expansion and New Depression Bodin, Jean Bonds: in diversified portfolio effect of stimulus on quantitative easing

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of Funds Accounts of the United States Food prices: deflation and excluded from CPI quantitative easing and Foreign causes, of credit expansion Bernanke’s global savings glut theory and central banks’ creation of fiat money and foreign exchange reserves possibility of end to China’s buying of U.S. debt Foreign exchange

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and decline in liquidity reserves quantitative easing and U.S. debt guarantees and Friedman, Milton General equilibrium, theory of Germany Glass–Steagall Act Globalization Global savings glut theory, of Bernanke Goldman Sachs Gold reserve requirement, end of and creation of fiat money Government Accountability Office report Government sector: inflation and deflation’s

Money and Government: The Past and Future of Economics

by Robert Skidelsky  · 13 Nov 2018

deficits in countries’ current accounts. A pseudo-Keynesian answer would be that the current account surpluses of China and the Middle East produced a global ‘savings glut’, which could only be liquidated by a decline in the world economy. But this does not explain the weakness of investment performance in the capital

Paper Money Collapse: The Folly of Elastic Money and the Coming Monetary Breakdown

by Detlev S. Schlichter  · 21 Sep 2011  · 310pp  · 90,817 words

and Interventionism The Political Appeal of Mainstream Macroeconomics The Myth That Everybody Benefits from “Stimulus” Monetarism as Monetary Interventionism The Pattern of Economic Deterioration The Savings Glut Theory and the Myth of Underconsumption Inflationism and International Policy Coordination Summary Chapter 10 Beyond the Cycle The Size of the Dislocations The Nationalization of

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will be shown that the extent of savings can never provide a satisfactory explanation for why an economic crisis occurs. Second, an analysis of the “savings glut theory” provides a good illustration of international aspects of the current monetary infrastructure. In particular, it can show how domestic inflationism can be substantially extended

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via a de facto international coordination of monetary policy. The Savings Glut Theory and the Myth of Underconsumption The notion that recessions occur because people save too much and consume too little has a very long history

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explain why the pricing mechanism that coordinates the various activities in the economy fails, and for this, money is the prime candidate. The so-called savings glut theory became popular before the recent financial crisis, not least because it was embraced by Ben Bernanke in a speech in 2005 before he became

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. There, people consume less in the present period than they produce in the present period. They save by accumulating IOUs. Bernanke’s version of the savings glut theory stated that the primary mover of the U.S. current account deficit might not be, as was generally accepted, domestic consumption in the United

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the accounts. This point is of no relevance to the topic discussed in this study. What is relevant to our purposes, however, is that the savings glut theory later, after the financial crisis had started, provided many commentators with a narrative of how the imbalances could have developed that played a role

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rate, and the concurrence of high levels of consumption with high levels of investment (mainly in residential real estate). According to this interpretation of the savings glut theory, these phenomena could have resulted from excess savings abroad rather than from domestic monetary arrangements and domestic monetary policy in the United States. The

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propensity to save is by itself insufficient to cause economic disruptions, but money injections must always lead to economic dislocations. The international aspect of the savings glut theory is equally insufficient to help explain a crisis. In an open economy it simply doesn’t matter whether the savings are raised locally or

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substantial foreign savings, then these phenomena would not have constituted dislocations and not initiated a crisis. (We may recall that Bernanke did not propagate the savings glut theory to explain a crisis, which at that point had not started yet.) But if one wanted to use these phenomena as the basis for

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allowed investment and saving to be temporarily out of synch. At this point one would have again arrived at a monetary cycle theory. If the savings glut theory describes the result of voluntary savings then it cannot explain the crisis. If one wants to build a crisis theory on what the

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savings glut theory describes, one would have no choice but to use the monetary crisis theory again, rendering the savings glut theory superfluous in the first place. Inflationism and International Policy Coordination Indeed, international capital flows and

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the phenomena described by Bernanke’s version of the savings glut theory can be integrated with the monetary crisis theory quite straightforwardly. To do this, we may take a step back and envision a time line

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his inflating dollars, at least in terms of Chinese produce. It is this internationally coordinated paper money production that explains all the phenomena that the savings glut theorists concern themselves with: the large United States current account deficit and the corresponding Asian surpluses; the concurrence of low savings and high levels of

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. A. Hayek, Volume 9 (London: Routledge: 1995), pp. 74–120. 17. Ludwig von Mises, Geldwertstabilisierung und Konjunkturpolitik, p. 1. 18. Ben S. Bernanke, The Global Savings Glut and the US Current Account Deficit (Federal Reserve Board, Washington DC, March 2005), http://www.federalreserve.gov/boarddocs/speeches/2005/200503102/ 19. For example: Martin

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, Carmen relative prices, money supply and reserve banking system reserve ratio Ricards, David Rogoff, Kenneth Roosevelt, Franklin D. Russia, default S safekeeping, gold savings voluntary savings glut theory secular deflation silver Smith, Adam Southern Song Dynasty specie stability, decreased state-bank alliance state, paper money and stimulus, benefit myth T Theorie des

The End of Alchemy: Money, Banking and the Future of the Global Economy

by Mervyn King  · 3 Mar 2016  · 464pp  · 139,088 words

whole there was an excess of saving, or in the vivid phrase of Ben Bernanke, Chairman of the Federal Reserve from 2006 to 2014, a ‘savings glut’ in the new expanded global capital market.20 This glut of saving pushed down long-term interest rates around the world. We think of interest

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recent years, short-term real interest rates have actually been negative because official interest rates have been less than the rate of inflation. And the savings glut pushed down long-term real interest rates to unprecedentedly low levels.21 In the nineteenth century and most of the twentieth, real rates were positive

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to developing economies where profitable opportunities abound, as happened in the late nineteenth century when Europe invested in Latin America. A strange feature of the savings glut was that because emerging economies were saving more than they were investing at home, they were actually exporting capital to advanced economies where investment opportunities

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climate supported the development of large and highly leveraged global banks, and regulators were under pressure not to impede the expansion of the sector. The ‘savings glut’ and the ‘banking glut’ combined to produce a toxic mix of a serious disequilibrium in the world economy, on the one hand, and an explosion

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larger and larger holes in future demand. The result is a self-reinforcing path of weak growth in the economy. What started as an international savings glut has become a major disequilibrium in the world economy. This creates an enormous challenge for monetary policy. Central banks are, in effect, like cyclists pedalling

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reflection of the lower level of long-term real interest rates documented in Chapter 1. The real causes of the rise in debt were the ‘savings glut’ and the response to it by western central banks that led to and sustained the fall in real interest rates. The danger with the ‘economics

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(2014) ‘Germany and the Euro: The Revenge of Helmut Schmidt’, Kurt Viermetz Lecture, American Academy of Berlin, 5 June 2014. Bernanke, Ben (2005), ‘The Global Savings Glut and the US Current Account Deficit’, Sandbridge Lecture, Virginia Association of Economists, 10 March. —— (2014), ‘Central Banking After the Great Recession: Lessons Learned and Challenges

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, 63, 180; ‘natural’ real rate, 44; need for return to normal, 353; negative, 29, 44, 185, 291, 299, 300–1, 335–6; real, 29; and ‘savings glut’, 28, 29, 46, 319, 325; and unemployment, 169, 298–300; very low levels post-crisis, 11, 40, 43, 44–5, 48, 183–5, 291, 312

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Russia, 121, 159 saving, 101–2, 155, 308–17, 362–3; in emerging economies, 22–3, 27–8, 29, 30; ‘paradox of thrift’, 297, 326; ‘savings glut’, 28, 29, 30, 46, 319, 325; as source of future demand, 11, 46, 84–5, 185, 325–6, 356 Schacht, Hjalmar, 341–2, 343 Schäuble

The Wealth of Humans: Work, Power, and Status in the Twenty-First Century

by Ryan Avent  · 20 Sep 2016  · 323pp  · 90,868 words

financial trouble. The upshot of this reserve accumulation was growth in what Ben Bernanke,2 during his time at the Federal Reserve, called a global savings glut.3 Excess saving meant a shortfall in global consumption, in global demand. To prevent demand from tumbling, central banks needed to take what action they

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supporting infrastructure and time lags see also digital revolution Germany ‘gig economy’ Glaeser, Ed global economy growth in supply chains imbalances lack of international cooperation savings glut and social consensus globalization hyperglobalization and secular stagnation and separatist movements Goldman Sachs Google Gordon, Robert Gothenburg, Sweden Great Depression Great Depression (1930s) Great Exhibition

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wild contingency of wealth Robinson, James robots Rodrik, Dani Romney, Mitt rule of law Russia San Francisco San Jose Sanders, Bernie sanitation SAP Saudi Arabia savings glut, global ‘Say’s Law’ Scalia, Antonin Scandinavian and Nordic economies scarcity and labour political effects of Schleicher, David Schwartz, Anna scientists Scotland Sears Second World

Crisis Economics: A Crash Course in the Future of Finance

by Nouriel Roubini and Stephen Mihm  · 10 May 2010  · 491pp  · 131,769 words

Slouching Towards Utopia: An Economic History of the Twentieth Century

by J. Bradford Delong  · 6 Apr 2020  · 593pp  · 183,240 words

Panderer to Power

by Frederick Sheehan  · 21 Oct 2009  · 435pp  · 127,403 words

The Production of Money: How to Break the Power of Banks

by Ann Pettifor  · 27 Mar 2017  · 182pp  · 53,802 words

Crashed: How a Decade of Financial Crises Changed the World

by Adam Tooze  · 31 Jul 2018  · 1,066pp  · 273,703 words

The Man Who Knew: The Life and Times of Alan Greenspan

by Sebastian Mallaby  · 10 Oct 2016  · 1,242pp  · 317,903 words

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by Charles Goodhart and Manoj Pradhan  · 8 Aug 2020  · 438pp  · 84,256 words

The Ascent of Money: A Financial History of the World

by Niall Ferguson  · 13 Nov 2007  · 471pp  · 124,585 words

Investing Amid Low Expected Returns: Making the Most When Markets Offer the Least

by Antti Ilmanen  · 24 Feb 2022

Financial Fiasco: How America's Infatuation With Homeownership and Easy Money Created the Economic Crisis

by Johan Norberg  · 14 Sep 2009  · 246pp  · 74,341 words

The Alchemists: Three Central Bankers and a World on Fire

by Neil Irwin  · 4 Apr 2013  · 597pp  · 172,130 words

Shocks, Crises, and False Alarms: How to Assess True Macroeconomic Risk

by Philipp Carlsson-Szlezak and Paul Swartz  · 8 Jul 2024  · 259pp  · 89,637 words

The Cost of Inequality: Why Economic Equality Is Essential for Recovery

by Stewart Lansley  · 19 Jan 2012  · 223pp  · 10,010 words

The Euro: How a Common Currency Threatens the Future of Europe

by Joseph E. Stiglitz and Alex Hyde-White  · 24 Oct 2016  · 515pp  · 142,354 words

Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown

by Philip Mirowski  · 24 Jun 2013  · 662pp  · 180,546 words

The Invisible Hands: Top Hedge Fund Traders on Bubbles, Crashes, and Real Money

by Steven Drobny  · 18 Mar 2010  · 537pp  · 144,318 words

Losing Control: The Emerging Threats to Western Prosperity

by Stephen D. King  · 14 Jun 2010  · 561pp  · 87,892 words

The Color of Money: Black Banks and the Racial Wealth Gap

by Mehrsa Baradaran  · 14 Sep 2017  · 520pp  · 153,517 words

Money Free and Unfree

by George A. Selgin  · 14 Jun 2017  · 454pp  · 134,482 words

Open: The Progressive Case for Free Trade, Immigration, and Global Capital

by Kimberly Clausing  · 4 Mar 2019  · 555pp  · 80,635 words

Unfinished Business

by Tamim Bayoumi  · 405pp  · 109,114 words

Foolproof: Why Safety Can Be Dangerous and How Danger Makes Us Safe

by Greg Ip  · 12 Oct 2015  · 309pp  · 95,495 words

Paper Promises

by Philip Coggan  · 1 Dec 2011  · 376pp  · 109,092 words

Stress Test: Reflections on Financial Crises

by Timothy F. Geithner  · 11 May 2014  · 593pp  · 189,857 words

European Spring: Why Our Economies and Politics Are in a Mess - and How to Put Them Right

by Philippe Legrain  · 22 Apr 2014  · 497pp  · 150,205 words

The Glass Half-Empty: Debunking the Myth of Progress in the Twenty-First Century

by Rodrigo Aguilera  · 10 Mar 2020  · 356pp  · 106,161 words

Stolen: How to Save the World From Financialisation

by Grace Blakeley  · 9 Sep 2019  · 263pp  · 80,594 words

House of Cards: A Tale of Hubris and Wretched Excess on Wall Street

by William D. Cohan  · 15 Nov 2009  · 620pp  · 214,639 words

Aerotropolis

by John D. Kasarda and Greg Lindsay  · 2 Jan 2009  · 603pp  · 182,781 words

A Failure of Capitalism: The Crisis of '08 and the Descent Into Depression

by Richard A. Posner  · 30 Apr 2009  · 305pp  · 69,216 words

Hubris: Why Economists Failed to Predict the Crisis and How to Avoid the Next One

by Meghnad Desai  · 15 Feb 2015  · 270pp  · 73,485 words

The Age of Stagnation: Why Perpetual Growth Is Unattainable and the Global Economy Is in Peril

by Satyajit Das  · 9 Feb 2016  · 327pp  · 90,542 words

The Rise and Fall of Nations: Forces of Change in the Post-Crisis World

by Ruchir Sharma  · 5 Jun 2016  · 566pp  · 163,322 words

Meltdown: How Greed and Corruption Shattered Our Financial System and How We Can Recover

by Katrina Vanden Heuvel and William Greider  · 9 Jan 2009  · 278pp  · 82,069 words

Austerity: The History of a Dangerous Idea

by Mark Blyth  · 24 Apr 2013  · 576pp  · 105,655 words

More: The 10,000-Year Rise of the World Economy

by Philip Coggan  · 6 Feb 2020  · 524pp  · 155,947 words

The Curse of Cash

by Kenneth S Rogoff  · 29 Aug 2016  · 361pp  · 97,787 words

The Corruption of Capitalism: Why Rentiers Thrive and Work Does Not Pay

by Guy Standing  · 13 Jul 2016  · 443pp  · 98,113 words

The End of Wall Street

by Roger Lowenstein  · 15 Jan 2010  · 460pp  · 122,556 words

Utopia or Bust: A Guide to the Present Crisis

by Benjamin Kunkel  · 11 Mar 2014  · 142pp  · 45,733 words

The Corona Crash: How the Pandemic Will Change Capitalism

by Grace Blakeley  · 14 Oct 2020  · 82pp  · 24,150 words

Rethinking Capitalism: Economics and Policy for Sustainable and Inclusive Growth

by Michael Jacobs and Mariana Mazzucato  · 31 Jul 2016  · 370pp  · 102,823 words

The Asian Financial Crisis 1995–98: Birth of the Age of Debt

by Russell Napier  · 19 Jul 2021  · 511pp  · 151,359 words

Extreme Money: Masters of the Universe and the Cult of Risk

by Satyajit Das  · 14 Oct 2011  · 741pp  · 179,454 words

The Globalization Paradox: Democracy and the Future of the World Economy

by Dani Rodrik  · 23 Dec 2010  · 356pp  · 103,944 words

The Default Line: The Inside Story of People, Banks and Entire Nations on the Edge

by Faisal Islam  · 28 Aug 2013  · 475pp  · 155,554 words

Seven Crashes: The Economic Crises That Shaped Globalization

by Harold James  · 15 Jan 2023  · 469pp  · 137,880 words

In FED We Trust: Ben Bernanke's War on the Great Panic

by David Wessel  · 3 Aug 2009  · 350pp  · 109,220 words

Dreams of Leaving and Remaining

by James Meek  · 5 Mar 2019  · 232pp  · 76,830 words

The Signal and the Noise: Why So Many Predictions Fail-But Some Don't

by Nate Silver  · 31 Aug 2012  · 829pp  · 186,976 words

Expected Returns: An Investor's Guide to Harvesting Market Rewards

by Antti Ilmanen  · 4 Apr 2011  · 1,088pp  · 228,743 words

A Pelican Introduction Economics: A User's Guide

by Ha-Joon Chang  · 26 May 2014  · 385pp  · 111,807 words

The Joy of Tax

by Richard Murphy  · 30 Sep 2015  · 233pp  · 71,775 words

Firefighting

by Ben S. Bernanke, Timothy F. Geithner and Henry M. Paulson, Jr.  · 16 Apr 2019

Profiting Without Producing: How Finance Exploits Us All

by Costas Lapavitsas  · 14 Aug 2013  · 554pp  · 158,687 words

The Long Good Buy: Analysing Cycles in Markets

by Peter Oppenheimer  · 3 May 2020  · 333pp  · 76,990 words

Capitalism: Money, Morals and Markets

by John Plender  · 27 Jul 2015  · 355pp  · 92,571 words

How the Other Half Banks: Exclusion, Exploitation, and the Threat to Democracy

by Mehrsa Baradaran  · 5 Oct 2015  · 424pp  · 121,425 words

Capitalism in America: A History

by Adrian Wooldridge and Alan Greenspan  · 15 Oct 2018  · 585pp  · 151,239 words

Too big to fail: the inside story of how Wall Street and Washington fought to save the financial system from crisis--and themselves

by Andrew Ross Sorkin  · 15 Oct 2009  · 351pp  · 102,379 words

The Blockchain Alternative: Rethinking Macroeconomic Policy and Economic Theory

by Kariappa Bheemaiah  · 26 Feb 2017  · 492pp  · 118,882 words

Bean Counters: The Triumph of the Accountants and How They Broke Capitalism

by Richard Brooks  · 23 Apr 2018  · 398pp  · 105,917 words

Models. Behaving. Badly.: Why Confusing Illusion With Reality Can Lead to Disaster, on Wall Street and in Life

by Emanuel Derman  · 13 Oct 2011  · 240pp  · 60,660 words

Brazillionaires: The Godfathers of Modern Brazil

by Alex Cuadros  · 1 Jun 2016  · 433pp  · 125,031 words

How Will Capitalism End?

by Wolfgang Streeck  · 8 Nov 2016  · 424pp  · 115,035 words

The Meritocracy Trap: How America's Foundational Myth Feeds Inequality, Dismantles the Middle Class, and Devours the Elite

by Daniel Markovits  · 14 Sep 2019  · 976pp  · 235,576 words

Civilization: The West and the Rest

by Niall Ferguson  · 28 Feb 2011  · 790pp  · 150,875 words

The Innovation Illusion: How So Little Is Created by So Many Working So Hard

by Fredrik Erixon and Bjorn Weigel  · 3 Oct 2016  · 504pp  · 126,835 words

The Knowledge Economy

by Roberto Mangabeira Unger  · 19 Mar 2019  · 268pp  · 75,490 words

Cogs and Monsters: What Economics Is, and What It Should Be

by Diane Coyle  · 11 Oct 2021  · 305pp  · 75,697 words

The Dawn of Eurasia: On the Trail of the New World Order

by Bruno Macaes  · 25 Jan 2018  · 287pp  · 95,152 words