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The result, according to some economists: A reversal of the decades-long trend toward lower interest rates as borrowers from Washington on down are forced to pay up for a dwindling supply of excess cash.\u00a0<\/p>\n
\u201cWe are entering an era of greater geopolitical rivalry and more transactional economic relations\u201d that will depress the global supply of savings, former European Central Bank President and Italian Prime Minister Mario Draghi said in a recent speech. \u201cThe downward pressure on global real rates that has marked much of the era of globalization should be reversed.\u201d<\/p>\n
In 2005, Bernanke argued the world was awash with savings because China and other emerging markets were deliberately building up foreign-currency reserves as insurance against future financial crises. Oil exporters also had more money to invest, thanks to a surge in energy prices.\u00a0<\/p>\n
The result: Downward pressure on long-term interest rates around the world, including in the US. (Bernanke declined to comment for this article).<\/p>\n
Read More: The Price of Money Is Going Up, and It\u2019s Not Because of the Fed<\/p>\n
Data compiled separately by Hanover Provident founder Robert Dugger and by Chicago Fed economists Robert Barsky and Matthew Easton suggest the glut crested some years ago. Its impact though was masked by the especially easy policies the Fed and other central banks hewed to coming out of the 2007-09 financial crisis. The pandemic subsequently triggered an even greater gusher of cash from the monetary and fiscal authorities as they fought to keep their economies afloat.\u00a0<\/p>\n<\/section>\n