Global Saving Glut and Housing Bubble: A Critical Analysis
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Abstract
This paper examines the explanation of the "subprime" crisis provided by Bernanke according to which the origin of the housing bubble stemmed from the global saving glut that occurred in the decade 1996-2006. The paper has two objectives. First, it highlights the limits of Bernanke's thesis. Second, it shows that a meaningful explanation of the crisis has to be grounded on the "monetary theory of production" proposed by Keynes to explain how a monetary economy works.
