In 2005, Ben Bernanke, then a governor of the US Federal Reserve Board, introduced the idea of a global savings glut to explain why the United States ran persistent current-account deficits. Departing from much of the academic thinking of the 1980s and 1990s, he argued that excess savings outside the US made interest rates – particularly long-term rates – lower than they otherwise would be.

Bernanke was developing an idea that then-Fed Chair Alan Greenspan had also flirted with. The US current-account deficits persisted because US Treasury bonds appealed to savers around the world who were eager to hold supposedly safe assets. In the past, there had been an assumption that these persistent deficits would at some point jeopardise the stability of the dollar and force US interest rates higher as protection against inflation and domestic financial instability.