On Econbrowser Menzie Chinn has posted about an increase in the scale of US international net indebtedenss. Since the late 1980s the US has been a net debtor internationally, borrowing more from abroad then we are lending and investing there. The increase in this net indebtedness has noticeably accelerated since our current POTUS took office, and especially this year. The size of that net indebtedness has gone from about 40% of US GDP to somewhat more than 55%, a pretty substantial increase, given that we have been in this condition for over three decades and in three years by more than a third. The fiscal stimulus of this year has definitely been overwhelmingly financed by foreign borrowing.
This increase in net indebtedness highlights a longstanding anomaly that now looks even more anomalous. Even though the US has been a net debtor for over three decades, it has remained a positive net earner on capital income arising from all those international capital movements in and out of the US. This is mostly measured by the primary income part of the international capital account, which last year was in surplus at a bit over $60 billion. What is more curious is that this does not seem to have changed much at all over the last five years, some slight changes here and there, but mostly unchanged. I confess to being mystified as to how an increase in net indebtedness by more than a third has led to essentially no change in the capital income payments situation.