December 10, 1990
"Making of a Debtor"
San Jose Mercury News
By Timothy Taylor
<< Back to 1990
THE 1980s were a decade when global capital markets began to tie
the world economy into a single package.
As the 1990s begin, America owns more of the rest of the world
than it ever has before. U.S. assets abroad grew rapidly through
the 1980s, roughly doubling from 1981 to 1989. But foreign assets
in the United States grew even more rapidly, more than tripling
since 1981. In 1985, when the two lines on the graph at right cross,
the value of U.S. assets owned by foreigners begins to exceed the
value of foreign assets owned by Americans. In short, the United
States became a debtor nation.
U.S. assets abroad consist of many items: investments by U.S. citizens
and companies in foreign stocks and bonds; direct ownership of companies
and land; loans and moneys owed to U.S. banks by foreigners; U.S.
government assets being held abroad; and more. Similarly, foreign
assets in the United States include ownership of U.S. stocks and
bonds, direct ownership of U.S. companies and land, foreign holdings
of U.S. government debt and the amounts that U.S. borrowers owe
Obviously, collecting and compiling this sort of data is a messy
business, but no measurement error is going to reverse the basic
trend: The United States is plunging more deeply into debt every
Since 1984, the American economy has assumed an average of $130
billion of additional foreign debt each year. If that trend continues
through 1992 -- and there's no good reason why it won't continue
-- the U.S. economy will be toting around $1 trillion in foreign
That works out to an average of $4,000 in foreign debt owed by
every man, woman and child in the United States, all 250 million
<< Back to 1990