Proof that Global Imbalances Did Not Cause the Financial Crisis

Debunking the net-flows paradigm

At the heart of the Trump-Biden-Khanna thesis on US foreign relations is the suspicion that global imbalances caused the global financial crisis. This is coupled to the idea that American deficits — the flipside of the surpluses run by other commercial powers — have hurt American interests. Specifically, the argument is that, whether fairly or unfairly,…