>The U.S. runs a trade deficit. This means foreigners
>accumulate claims to U.S. dollar-denominated assets.
>(It says nothing about whether the stock of such
>assets is growing or declining.)
How can it not grow? Unless the U.S. runs a large surplus on investment income, which it doesn't, then the deficit has to be financed by borrowing. The annual deficit on the current account has to be matched by some form of capital inflow, so the stock of debt has to increase. It's basic arithmetic.
Doug