US Dollar remained artificially strong
Some of the Asian proceeds from US spending on Asian imports were used to build up foreign currency reserves in the US dollar, and the demand kept the US dollar artificially strong and made Asian imports continue to appear cheap to US consumers.
Immediately related elementsHow this works
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The Global Financial Crisis Â»The Global Financial Crisis
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Long-term causes of the financial crisis? Â»Long-term causes of the financial crisis?
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Unintended consequences of earlier public policy choices Â»Unintended consequences of earlier public policy choices
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US spending funded by credit Â»US spending funded by credit
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People encouraged to live beyond their means Â»People encouraged to live beyond their means
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Cost of borrowing low Â»Cost of borrowing low
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Asian investment in US treasuries Â»Asian investment in US treasuries
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Positive feedback loop with US buying Asian-produced imports Â»Positive feedback loop with US buying Asian-produced imports
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US Dollar remained artificially strong
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