The current account deficit measures U.S. trade in terms of goods and services and of income and transfer payments. Beginning in the 1990s, and at a quickening pace since 2001, this deficit has risen from roughly zero to over six percent of the United States' gross domestic product. At the same time, Asian and oil-exporting countries accumulated equally spectacular surpluses. How did this imbalance come about —and why so drastically? In this book, economists Anton Brender and Florence Pisani dissect the mechanisms that led to the formation of global imbalances and enabled the savings generated in one place on the planet to be used in another.

The savings transfers that took place cannot be explained solely by greater freedom of capital movements. They were also the product of economic policies and of globalized finance that transformed the ways capital circulates and the risks attendant on its investment are borne. These new arrangements were of astonishing power, but also great vulnerability. This study throws light on how they worked and on the sequence of events that led to the collapse of globalized finance.