The world is suffering from a global glut of savings. For production expanding investment to occur, there must be (1) savings to fund the investment and (2) the belief that the investment will appreciate in value. If there is insufficient consumption to justify the investment to expand production, then savings either (1) sit idle, (2) fund speculative bubbles, or (3) seek a return from rent or deception. This course will document the global glut of savings and show how it played a pivotal role in the Thai financial crisis of 1997 and in the Great Recession of 2008-2009 in the USA and Europe.
The professor for this course wrote a book that documents how this global glut of savings has diminished the effectiveness of government fiscal, monetary, trade, and exchange rate policies. Although this course will address the content of that book, its primary focus will be on the implications of the global glut of savings for private business. Students will be encouraged to engage in class discussions about how the global glut of savings affects many of industries with which they are most familiar.