[rayiner]

Interesting point. I hadn't thought of it this way before:

> But imagine that the Japanese both want to get out of their U.S. real estate and entirely away from dollar assets. They can’t accomplish that by selling their real estate to Americans, because they will get paid in dollars. And if they sell their real estate to non-Americans—say, the French, for euros—the property will remain in the hands of foreigners. With either kind of sale, the dollar assets held by the rest of the world will not (except for any concurrent shift in the price of the dollar) have changed.

> The bottom line is that other nations simply can’t disinvest in the U.S. unless they, as a universe, buy more goods and services from us than we buy from them. That state of affairs would be called an American trade surplus, and we don’t have one.

> But under any realistic view of things, our huge trade deficit guarantees that the rest of the world must not only hold the American assets it owns but consistently add to them. And that’s why, of course, our national net worth is gradually shifting away from our shores.

[Fade_Dance]

It works the other way as well. Ex: exporting dollars solidifies a bid for US debt (because by far the easiest way to use excess dollars is to buy US treasuries), which allows the US to keep easily exporting dollars. When capital flows to the US are sustainably strong, the dollar performs well (which is amplified from being the reserve currency for international trade), which means foreign capital is incentivzed to join the bandwagon (strong dollar + strong US assets performance = great returns for international participants). It's self reinforcing to the upside, and it's theoretically somewhat self-reinforcing if it unwinds as well.