The general view, which is represented by Instituinal Economics, is however not that oversaving is caused by households, but by Governments:
I agree with John that it is perverse that we should see developing countries saving to fund investment in rich countries, but this is due to forced saving via managed exchange rate regimes. It is indeed ridiculous that China is issuing domestic debt to fund purchases of US debt instruments, as Deepak Lal has noted, but symptomatic of its mercantilist development strategy. I agree that this will not be sustained because fixed exchange rate regimes always come unstuck, but I see this as being more of an issue for China than for the US or Australia.But to me, the claim that [the government of]China is "issuing domestic debt to fund purchases of US debt" seems a very good support of my household story. As domestic investors could find it more difficult to invest in US than domestically, the government here sees a natural business opportunity to channel the domestic Chinese demand for savings into US assets. Furthermore, I would like to question the currency-peg explanation. It is true that an undervalued currency stimulates export industry at the cost of domestic services, hence stimulating savings. But with arguments similar to those in the Balassa-Samuelson framework, the real exchange rate will anyway be adjusted by inflation, eventually neutralizing the nominal peg.