Foreign buyers no longer binging on long-term U.S. debt
The lack of foreign investment in long-term US assets is not going to go up anytime soon according to a leading trade economist.
Some experts say that this is a necessary part of the 'rebalancing' of an economy on the downward trend as the US trade deficit is unsustainable, but the outcome could be inflation for everyone. This all hangs on the federal budget deficit.
The warning about foreign investment was based on the latest data from the Treasury Department’s International Capital System (TIC).
The TIC showed that foreign investment in long-term Treasury bonds and U.S. corporate debt and equity fell by another $56 billion in November following a $37 billion decline the month before.
“The latest TIC data provides yet more evidence that financial globalization—the rise in cross-border flows—has peaked,” Brad Setser, a fellow in geonomics at the Council on Financial Relations, wrote today on his website, “Follow the Money.”
This is such a concern because it means the US budget will no longer be financed from overseas investors.