Bernanke: there’s still a “global savings glut”
Ben Bernanke, chairman of the Federal Reserve Board, said it before and now he says it again that there is a ”global savings glut” — this time to sooth the investor’s nerves: http://www.bloomberg.com/apps/news?pid=20601087&sid=aqH8jkOowP3U&refer=home
What does he mean by “savings glut”? If he has the Chinese foreign reserves and that of the oil exporters’ in mind, he’d better speak not of a “savings glut” but of a “dollar glut”, and if Bernanke had somewhat a knowledge about Austrian economics he’d better say “credit glut”. It’s exactly in the latter sense that his statement should be read: that the credit glut still helps to keep interest rates low.Â
Antony Mueller
Backgrounders: Speech by Chairman Ben S. Bernanke at the Bundesbank Lecture, Berlin, September 11, 2007 about “Global Imbalances: Recent Developments and Prospects”: http://www.federalreserve.gov/newsevents/speech/bernanke20070911a.htm
Ben Bernanke’s speech of March, 2005 about the global savings glut and the US current account deficit: http://www.federalreserve.gov/boarddocs/speeches/2005/200503102/default.htm