Excessive financial inflow into U.S. before global crisis led to trouble, Brad Setser warns

Excessive financial inflow into U.S. before global crisis led to trouble, Brad Setser warns
Excessive U.S. inflow before crisis

Brad Setser reflects on concerns about economic imbalances during a period when China primarily produced low value added goods.

He points to the excessive financial inflow into the U.S. prior to the global financial crisis and identifies this, along with leveraged financial institutions, as contributing factors that led to economic trouble.

Setser has previously warned that China’s expansion in supply requires significant exports to avoid global trade imbalances, citing ongoing structural challenges in the country’s growth model. He has also noted unresolved issues around China’s currency intervention and the gap between domestic demand and import growth. Those earlier concerns are detailed in his analysis of China’s export dependence and his comments on the nation’s currency weakness and import trends.

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