Actually, Randy, the amount of US treasury debt held by foreigners is rather small compared to all the other types of cross-border investments. Here's a table of the "Net international investment position" of the US. As you can see, US treasuries make up only about 5.5% of foreign investment in the US or $503 billion (out of the $7 trillion total federal debt, BTW).
Type of investment / Position, 2002p
Net international investment position of the United States:
With direct investment positions at current cost (line 3 less line 16) -2,387,211
With direct investment positions at market value (line 4 less line 17) -2,605,155
U.S.-owned assets abroad:
With direct investment positions at current cost 6,189,191
With direct investment positions at market value 6,473,562
U.S. official reserve assets 158,602
U.S. Government assets, other than official reserve assets 85,686
U.S. private assets:
With direct investment at current cost 5,944,903
With direct investment at market value 6,229,274
Direct investment abroad:
At current cost 1,751,852
At market value 2,036,223
Foreign securities 1,846,976
..Bonds 501,784
..Corporate stocks 1,345,192
U.S. claims on unaffiliated foreigners reported by U.S. nonbanking concerns 890,961
U.S. claims reported by U.S. banks, not included elsewhere 1,455,114
Foreign-owned assets in the United States:
With direct investment at current cost 8,576,402
With direct investment at market value 9,078,717
Foreign official assets in the United States 1,132,530
Other foreign assets:
With direct investment at current cost 7,443,872
With direct investment at market value 7,946,187
Direct investment in the United States:
At current cost 1,504,428
At market value 2,006,743
U.S. Treasury securities 503,630
U.S. securities other than U.S. Treasury securities 2,861,115
..Corporate and other bonds 1,690,296
..Corporate stocks 1,170,819
U.S. currency 297,082
U.S. liabilities to unaffiliated foreigners reported by U.S.
nonbanking concerns 870,259
U.S. liabilities reported by U.S. banks, not included elsewhere 1,407,358
Source: bea.doc.gov
What this means is that the $2.6 trillion (at market) net investment position of foreigners in the US has little to do with our "large" federal debt or our current gov't deficits. Rather, it seems to be a result of the fact that the US has proven to be an excellent place to invest. And contrary to what some (including people like GST who obviously never took Econ 101) would have you believe, capital flows INTO the US are a GOOD thing. |
