Some conflate foreign purchases of these assets with “investment,” but less than 5 percent of foreign direct “investment” goes toward building new American industrial capacity. The other 95 percent goes toward acquiring Treasury bonds (U.S. government debt) or stocks, bonds, and real estate from our private sector. Before the 1970s, foreigners held only 5 percent of treasury bonds—that number is around 40 percent today.

We are functionally buying foreign goods on credit while selling off our assets, leaving future generations poorer and reducing their ability to pay that credit back. “Our country has been behaving like an extraordinarily rich family that possesses an immense farm,” Warren Buffet once explained. “We have, day by day, been both selling pieces of the farm and increasing the mortgage on what we still own.” For perspective, he said this in 2003, when America’s net investment position was only down $2.5 trillion (it is down nearly $20 trillion today).

Read the article.