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Goods and services are on the current account side of the balance of payments. Savings and investments are on the capital account side. The two should sum to ze

Goods and services are on the current account side of the balance of payments. Savings and investments are on the capital account side. The two should sum to zero (otherwise stuff is being given away for free, which we assume probably doesn't happen). US consumers buy stuff with US dollars. Where do those US dollars go if the consumers spend them on imported goods? They end up invested in the US (or, depending on your political bent, "the Chinese buy up all of our companies"). The net international investment position (the amount of stuff the US owns abroad minus the amount of stuff other countries own in the US) is about -$11tn as a result of the persistent current account deficit and capital account surplus.

Retric 7y ago
> otherwise stuff is being given away for free, which we assume probably doesn't happen It sort of does, in that we export USD. Using USD outside the US requires holding USD. Inflation means you need a continuing flow of USD to maintain that balance. Thus, on net the US is actually selling USD for goods. “Federal Reserve data from 2017 showed that the number of $100 bills exceeded the number of $1 bills. However, a 2018 research paper by the Federal Reserve Bank of Chicago estimated that 80 percent of $100 bills were in other countries.“ https://en.wikipedia.org/wiki/United_States_one_hundred-dollar_bill https://en.wikipedia.org/wiki/United_States_one_hundred-doll... This is countered by people in the US holding foreign currency, but the US is very much exporting currency on net.