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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: GraceZ who wrote (29042)2/21/2003 8:11:02 PM
From: LLCF  Read Replies (1) of 74559
 
<When someone points out that the US trade deficit results in the US being indebted to foreigners I like to ask them if they know what the percentage of foreign investment flows into the US winds up in the form of debt, as opposed to cash instruments, equity and real estate. >

Why?

<Dollars that we pay to importers are not debt, they are dollars. >

Every dollar is still a liability of the US government.

<They don't have to come back to the US >

No, and they haven't been... for decades. Economists worried they would 20 years ago, and aren't worried now [except a few smart ones :) ].

<Also, how much of our GDP goes to service this huge foreign owned debt:>

This seems irrelevant to me, don't know.

It seems to me the whole issue is what happends to our dollar and the markets if foreigners sell? The picture is certainly not pretty no matter how you slice that IMO. Since it's never happend before I don't think historical numbers mean much, although I'm sure they're much worse than say 10 years ago, both in nominal and % terms. That said, if it doesn't happen [it's never happend before, so statistically speaking it'll never happen], who cares numbers?

DAK
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