“Surplus” Chinese savings made possible America’s credit expansion between 2003-2005, when the federal funds rate (the overnight rate at which US banks lend to one another) was held at 1%. Ultra-cheap money produced a surge in sub-prime mortgage lending – a market that collapsed when interest rates increased steadily after 2005, reaching 5%.The financial crisis of 2008 was the start of a highly painful, but inevitable, process of de-leveraging.