Positive feedback loop with US buying Asian-produced imports
A postiive feedback loop emerged in which low US interest rates fuelled domestic US expenditure on imported consumer goods from the Asian economies, and Asian countries invested the proceeds in US Treasury bills, which kept US interest rates low.
Immediately related elementsHow this works
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The Global Financial Crisis »The Global Financial Crisis
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Long-term causes of the financial crisis? »Long-term causes of the financial crisis?
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Unintended consequences of earlier public policy choices »Unintended consequences of earlier public policy choices
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US spending funded by credit »US spending funded by credit
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People encouraged to live beyond their means »People encouraged to live beyond their means
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Cost of borrowing low »Cost of borrowing low
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Asian investment in US treasuries »Asian investment in US treasuries
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Positive feedback loop with US buying Asian-produced imports
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Influx of Asian money into the US market »Influx of Asian money into the US market
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US Dollar remained artificially strong »US Dollar remained artificially strong
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Cost of borrowing low »Cost of borrowing low
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