Thanks to a series of financial engineering instruments made possible
by the abolition of the Glass-Steagall law in 1999 like ABSs, CDSs,
interest rate forward contracts, securities in US dollars were
declared to be “secure”. Credit rating agencies rated these securities
as safe (like those of Lehman Brothers for example), giving them the
famous AAA or Triple-A grade. This way debt by private institutions
could be treated like currency, at face value, and could be registered
as balance sheet without the need to set aside reserves for any risk.
Similarly greatly underestimating the exchange rate of some emerging
economies, especially China’s, in terms of purchasing power parity
resulted in what is an actual subsidy to their exports.

Thank you Impeached Clinton!