Accounts Quote by Milton Friedman
“If you look at the balance sheet, the US is heavily in debt. If you look at the income account - the amount of interest the US pays abroad - it is almost exactly equal to the amount of interest that it receives from abroad. American assets held abroad are earning a higher rate of return than foreign assets held here.”
About This Quote
Source Speech: Economic Commentary, Date Unknown
The US owes much, but its net interest position balances because foreign assets earn higher returns than domestic ones.
In simple terms: US debt is offset by higher foreign returns.
Key Takeaway
Consider net interest flows.
Themes
economics
debt
international finance
Mood
analytical
concerned
Type
economic
financial
When to use this quote
- government budgeting
- investment strategy
- foreign exchange analysis
Key Concepts
interest parity
asset returns
balance of payments
Questions to Reflect On
- How sustainable are these net interest gains?
- What risks arise if foreign returns fall?
A Different Perspective
Higher returns abroad may not offset principal debt risk.
![“That would be nice if [people] stuck [treasury bills] all under a mattress, but they got to buy something with them. Sometimes they buy a treasury note, sometimes they set up sovereign wealth funds. They can do all kinds of things. They can buy our companies here. As long as we consume more than…” quote by Warren Buffett](https://sms4smile.com/quotes/img-quotes/ba1/warren-buffett-183_all-kinds_that-would-be-nice-if-people-stuck-treas_2128493.jpg)
