Can someone help me connect the dots here?
The study from the Erasmus Research Institute of Management says the saving frenzy of the Chinese created the cheap money, which fueled the U.S. housing bubble and its collapse.
The study goes on to blame the FED's loose monetary policy for igniting the refinancing boom which took place in 03-04 as well as igniting the growth in personal spending which took place around the same time but then concludes that China and not the FED was to blame for low interest rate which ignited the U.S. housing boom.
How can Chinese savings rates and not the FED's loose monetary policy be the cause of the U.S. housing boom?
It's not China's fault, per se. If you borrow money from the loan shark to payoff the bookie, who you gambled with in order to make some easy money... You get what you deserve.
The bookie probably shouldn't have loaned it to you. But regardless he's gonna get his pound of flesh. Next thing you know you're down at the pawn shop hoping they'll take some piece of crap that you have and give you 20 cents on the dollar to just make the vig on the loan. Eventually you got nothing left, and then what?
The real problem is that we're the bratty kids who wanted the fancy toys and the nice education and mommy and daddy just couldn't say no! So, daddy's gonna get whacked, mom's gonna be out on the streets workin for the local pimp, and the kids are gonna end up running drugs...
I'm not really joking. Get ready, if you want to "own the government" this is what you get. Welcome to the US of A...
The savers in China are not the cause of the financial debacle but the victims. Their crazy government stubbornly holds to its mercantilist policies of loaning money to the US Government to keep the price of US currency higher than it should be all to supply the USA with stuff made cheaper to consumers in the USA than it would be otherwise.
So the people in China that made all of the stuff get double hosed as the currency they hold decreases in value and the stuff they make gets shipped overseas.
The cause is easily seen using the logic of the Austrian Business Cycle Theory which says the US Fed, the central bank of the USA, is the cause. That is the only institution capable of causing this much economic chaos.