“Look around the world, and extra money is piling up in all sorts of places. Japanese corporations are recording record profits, but not doing much spending. Chinese companies are on an investment tear, but the country is getting so much money from exports that it has billions to spare.

Access to global savings has enabled the U.S. private and public sectors to fund a big increase in housing construction, health-care spending, and military outlays—all without boosting inflation or pushing up interest rates.

But the global economy is having a tough time absorbing the unanticipated flood of funds. Instead of going into productive investments, cheap money may be overheating spending and sending asset prices soaring too high, setting the stage for a future bust.

The savings surge also means that governments are not being penalized for running budget deficits. Cheap capital will give politicians the opportunity to waste the money on items that don’t boost long-term growth.

If low rates eventually pave the way for productive investment by governments and businesses, that would benefit investors. But until this happens, they must choose between accepting lower returns or taking on added risk.