AGAINST KRUGMAN Actually, aren't we really paying for war and housing with money printed by the Federal Reserve and accumulated by Asia? I'm uncomfortable with referring to it as savings, as even some notable Austrians have done. It's just that money that would otherwise have been recycled back into the economy purchasing real goods and services (an oil company, for instance) are being channeled back into the credit markets.

Also, remember, our theory tells us that China is colluding with the US banking system in all of this. It's not some sort of rivalry. China benefits from using the dollar to pyramid its own currency. They have an interest in parking their "reserves" in risk-free investments, even if the rates of return are dismal and the risk of portfolio valuation declines are significant.