FORTUNE — You would think that having an extra $70 trillion dollars lying around would be a good thing. But then NPR had to go and ruin that.
Back in mid-2008, when the financial crisis was still gaining its legs, the popular radio show This American Life, which is broadcast on National Public Radio, aired an episode that offered a counterintuitive explanation for why the economy was imploding — too much money. Not a little too much, either. Way, way too much money. The show dubbed it, “The Giant Pool of Money,” which was also the name of the episode.
The idea was that a newly rich China and others from emerging markets had gone looking for a place to stash their excess cash. What they found was the U.S. housing market, which offered a seemingly high-reward, low-risk investment. And perhaps it was, before it was overwhelmed by all this foreign cash. That led to lower borrowing rates, easy access to credit, lots of questionable derivatives, and, eventually, a crash.
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The show paired its explanation of The Giant Pool of Money with some ominous and engaging music, and it was a hit. Lots of people piled onto the idea that the financial crisis was, at least in part, not our fault. The episode has its own Wikipedia page. It won a coveted Peabody award, and it has spawned three follow-up episodes. International money flows became one of the many things the Financial Crisis Inquiry Commission investigated.
The only problem? The show might have gotten it wrong. It turns out having an extra $70 trillion dollars sloshing around the global economy might not be as bad as some thought.
A new study, which was recently published by the National Bureau of Economic Research, says that only about a quarter to a third of the rise in housing prices in the 2000s can be attributed to foreign investment in the U.S. housing market.
Same thing goes for lending. Only about a third to a quarter of all the debt that U.S. consumers piled up before the housing crash can be attributed to capital flowing into the U.S. from elsewhere.
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Even that figure might overstate the role of The Giant Pool of Money in the financial crisis. The papers’ authors, which include a professor from Northwestern University and two economists from the Federal Reserve, categorize foreign money flowing into the U.S. in the run-up to the financial crisis into two buckets. One stream they call the “Global Savings Glut,” which is essentially This American Life‘s Giant Pool of Money. The other is the “Global Banking Glut.” That was money that flowed from foreign, mostly European, banks looking to get in on the U.S. lending market.
Banks do get their money from savers, in the form of deposits. But the jump in U.S. lending by European banks in the 2000s appears to have been driven by bankers trying to boost returns at a time when Europe’s own economy was stagnating, not a surplus of cash. Capital ratios, like in the U.S., fell.
That’s not to say that The Giant Pool of Money didn’t contribute to the financial crisis. It did. But was it the cause? Probably not. The NBER study’s authors say it was significant. Nevertheless, the bulk of what led to the financial crisis, at least 66%, was the result of home-grown issues created in the U.S., not something that can be blamed on evil foreign cash.