ChrisCook:

How can I argue against such a consensus?

Like you did already, presumably...

ChrisCook:

But to come back to the point of the Diary, Wolf's assumption is that in some way the "Savings Glut" is pre-existing money which has been lent to unwise property purchasers/ investors.

The chain of causality is the other way around.

Secured loans were made to by credit institutions to assist in property purchases, and due to the deficit nature of the money supply these interest-bearing loans created new money which inflated the bubble still further.

The direct cause of asset price inflation is the deficit basis of money created as debt

A very large part of this new money which was instantaneously deposited back into the system was thereupon used by American consumers to buy Chinese etc goods, and this was then saved, by being deposited in the banking system somewhere in the world.

The Bubble caused the Savings Glut: the Savings Glut did not cause the Bubble.

But there you were addressing the claim that the Chinese "savings glut" had a deflationary impact on the US economy.

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith