everage, attracting and encouraging banks to take on more risk such as credit and liquidity, which further resulted in greater demand and supply of credit mortgages; before finally pushing up housing prices. The millions of sub-prime housing loans left outstanding by 2008 was the devastating effect of the government housing and monetary policy. McKibbin, & Stoeckel (2009, September) explored this issue and concluded the reasons behind the lengthy period of low rates, suggesting that it was due to improve consistency with low world rates. The slow economic growth in Japan and Europe from the 2001 downturn increased pressure to maintain interest rates low in US. In essence there is the idea that there was inappropriate use and monitoring of monetary policy in the USA, emphasized with international integration and trade.
             The interdependence of countries can again be reinforced through examining the extent of contagion of the GFC (McKibbin, & Stoeckel, 2009, September). The "domino effect" of this crisis can be suggested to have been initiated and caused by the start of the century, whereby improvements in the growth of the world economy resulted in expansion at exponential rates (Lin, & Treichel, 2012). Growth in emerging economies motivated savings and investment to flow into advanced economies, reducing low term rates (Merrouche, & Nier, 2010). This can explain Lin, & Treichel's (2012) argument where growth across developing, emerging and advanced countries encouraged strong periods of expansion and hence to the emergence of significant global imbalances, especially large account surpluses in East Asia and Europe and deficits in the USA. Studies highlighted the significance of such imbalances as a contributing threat in the growth and stability of the US and world markets, which initiated the GFC (Lin, & Treichel, 2012). More specifically the high current account deficit of the US economy reflected extreme levels of ne...