Quite a few economists are skeptical about Bernanke's theory, which leads to a relaxed interpretation of America's ability to finance its current account deficit of 6 percent of gross domestic product.

Global interest rates are low, many say, not because savings have risen but because central banks have followed the lead of Federal Reserve chairman Alan Greenspan and run a super-loose monetary policy.

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But to the extent that Asia is indeed revealing a preference to save more than it invests, and is recycling the surplus savings to the United States and other countries with current account deficits, the drivers of that trend seem well- entrenched. For a start, Asian governments, with the exception of South Korea, have resisted the marked exchange rate appreciation needed to help reduce external surpluses and shift the motor of growth to domestic demand.

"All you have to do is look around and see how reticent they are to allow their currencies to go up in any way, shape or form," said Bill Belchere, chief Asia economist at Macquarie Securities in Hong Kong.

China, for instance, has let the yuan rise just 0.25 percent since it was revalued by 2.1 percent and said it will be allowed to float in managed bands.

Asia will also save less if it invested more. But capital spending is only now starting to recover from a plunge of as much as 10 percentage points that it took after the 1997-98 Asian financial crisis triggered a deep recession across the region.

In its latest World Economic Outlook, the International Monetary Fund said the very low level of private investment underscored the need for post- crisis Asia to complete its "unfinished reform agenda," including financial and corporate sector restructuring and improvements in governance.

Asia's big current account surplus, projected by the IMF to drop just a bit to 3.7 percent of GDP this year from 4.1 percent of GDP in 2004, despite soaring oil bills, has led to the buildup of a US$2.65 trillion (HK$20.67 trillion) stockpile of forex reserves.

This bounty offends economic theory, which says capital should flow to, not from, developing countries where it can earn a higher rate of return.

But seen through the prism of Asia's demographic profile, some economists argue that it is perfectly rational for countries to save now before their populations start to age and growth slows.

"Maybe there's an argument for the savings rate to remain high because these economies will not be able to deliver the future levels of growth," said Sean Darby, a strategist with Nomura Securities in Hong Kong. "That's what happened in Japan. As the economy matured, returns dropped very sharply and people went through this huge propensity to save. That may very well be the case in other economies as well."

The incentive to save becomes even more compelling in countries with flimsy safety nets. China is a prime example. It has rudimentary pension, social security and health-care coverage, and the size of its labor force will peak somewhere around 2015.

Household savings in China have held steady in recent years, around 25 percent of disposable income, despite low inflation-adjusted interest rates on bank savings deposits.

"The big problem for China is that it will grow old before it grows rich," Darby said. "As such, accumulating FX reserves may not be a wrong thing to do."

Michael Pettis, an associate professor of finance at Peking University, agreed it made sense for countries - primarily Japan and European countries - to run up surpluses now and spend them as they turn grey.

As this demographically driven global savings and investment cycle unfolds, Pettis said he was confident US trade deficits will melt away and turn into surpluses within 20-30 years.

In the short term, though, the deficits will stay high.

Even if China, which accounts for a quarter of the US deficit, makes good on its intention to buy a lot more US goods next year, its trade surplus will remain well above the average of the past five years, he said.

"Unless we start to see much more rapid growth in Japan and Europe, the US trade deficit is going to stay for a few more years," Pettis said. "In the short term I just don't see any serious pressure for a reduction of the deficit." REUTERS