Global imbalances are back. Who’s to blame?

Apr 16th 2026|5 min read

In the years before Lehman Brothers went bust in 2008, plunging the world into financial crisis, macroeconomists were understandably worried. But they worried about the wrong thing: not over-indebted American banks, but over-thrifty Asian economies. There was a glut of commentary about the “global saving glut”. According to this theory, Asia’s determination to accumulate dollar reserves was depressing interest rates, tempting Americans to overspend. The upshot was that Asia earned more than it spent, resulting in large trade surpluses. This enabled America to spend more than it earned, reflected in a yawning current-account deficit (which includes the trade deficit and a few other things).