[ddxxdd]

I'm just going to throw this out there as well, but 1973 was when the Great Stagnation began (http://macromarketmusings.blogspot.com/2011/02/great-stagnat...), and it coincides quite closely to when Richard Nixon ended the Bretton Woods system and allows the value of the American dollar to float relative to other currencies.

In other words, globalization is a huge factor that the authors of the paper don't seem to be accounting for.

In fact, after Ctrl+F'ing "foreign", I get:

>By December 2015 holdings of liquid assets by foreign subsidiaries rose to $2.4 Trillion (see Whalen and McCoy (2016)) while domestic holdings of liquid assets rose since 2008 by about $1.9 Trillion. These foreign assets increased due to a legal provision that allows Indefinitely Reinvested Foreign Earnings to be free of US income tax. Hence, $2.4 Trillion are kept abroad not out of productive needs but rather as a device to save income tax hence not necessary for productive capacity

...so maybe American companies are using IT to store wealth abroad, but maybe American companies are being taken over by foreign entities? That would explain how our trade deficit has persisted for several decades.