But why, then, are America's debt service payments on its external liabilities so small compared to the size of the liabilities? Here's what Fred Bergsten says:
"These payouts are surprisingly small so far, amounting to only about $14 billion in 2001, because foreign investment by Americans yields a substantially higher return than foreigners' investments here."
So if returns on investments in the US are actually much *lower* than investments abroad, why does the US keep sucking up so much of the world's capital?
Could a major reason be that countries are being semi-coerced into putting a lot of their savings into low-yielding short-term US debt and bank deposits in order to build up forex reserves that protect them from exchange rate swings?
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