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by nudist 6041 days ago
Wow, Japan has more US debt than I thought. Anyone know how that happened? US companies don't tend to build stuff in Japan, do they?
2 comments

Remember how before all of our consumer electronics became Chinese they used to be Japanese. Also remember how most cars that work in america are also Japanese. We have been running a huge trade deficit with Japan since the 80s.

In fact I am surprised that China overtook Japan already.

They've overtaken Japan only in deficit (i.e. the derivative of debt); Japan could very well still have more debt.
I don't think the holders of US debt are related to trade. I think most US securities are held by governments and institutions as reliable, steady investments.
Actually I think it might be both. As I understand it, the US tends to pay for imports in USD, which it can do since it is the world's reserve currency. Trading partners then invest their USD trade surpluses back in US securities, I would assume at least partly to avoid affecting the values of their own currencies.

Wikipedia's article on the rise and fall of the Bretton Woods system is fascinating reading for those interested in the origins of the current situation (although it's also long and dry).

http://en.wikipedia.org/wiki/Bretton_Woods_system