Reply #45: Bernanke: Global 'saving glut' possible

[54anickel]

http://money.cnn.com/2006/03/24/news/economy/fed_bernanke.reut/index.htm

Fed chief says nothing has disproven his belief that U.S. trade deficit may be partly driven by excessive savings.
March 24, 2006: 6:39 AM EST


WASHINGTON (Reuters) - Federal Reserve Chairman Ben Bernanke said in a letter released Thursday nothing had emerged to undercut his year-old hypothesis that a "global saving glut" was a factor behind the large U.S. trade gap.

"Nothing has occurred since March 2005 to diminish support for the 'global saving glut' hypothesis, and the factors contributing to this 'glut' generally remain in place," Bernanke told Rep. Mark Kennedy, R-Minn.

snip>

This "global saving glut," he said in that speech, "helps to explain both the increase in the U.S. current account deficit and the relatively low level of long-term real interest rates in the world today."

He pointed to a number of factors that may have fueled a "saving glut," including a decision by developing Asian countries to build up foreign exchange reserves in the wake of the 1997-98 financial crisis and surging oil revenue in oil-exporting countries amid rising prices.

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