Global capital thus flowed ‘uphill’, from China (and most of North Asia) to the advanced economies, helping create what the Federal Reserve’s ex-Chair Ben Bernanke termed the ‘global savings glut’. The excess of desired savings over desired investment in the AEs was driving the equilibrium real interest rate lower by itself, since the dependency ratio improved in the 1980s. The injection of excess savings from China and North Asia served to push interest rates even lower.
