The massive inflow of foreign capital in the 2000s that enabled the American credit bubble was primarily from the private sector, not governments.

In recent years, central bankers in the West have become proponents of the theory that a glut of savings from the developing world led to huge capital inflows into the US in the early 2000s. But did a hunger for investment from the developing world really fuel America‚Äôs housing boom? Moritz Schularick and Paul Wachtel take a close look at … Continue reading The massive inflow of foreign capital in the 2000s that enabled the American credit bubble was primarily from the private sector, not governments.