Is the World Moving Away from American Assets?
That’s the question many observers pondered after President Trump enacted tariffs last year, creating tension with both allies and adversaries.
Recently, some indicators have raised eyebrows. A Bank of America survey reveals a decline in investor sentiment towards the dollar. For instance, Denmark’s pension fund is steering clear of the Ministry of Finance, and there’s a noticeable shift among investors towards non-U.S. and non-tech stocks, given the concentration of American indexes in the tech sector.
However, new data this week offers a crucial perspective. The US Treasury reported that foreign investors netted $1.55 trillion in U.S. long-term financial assets in 2025, up from $1.18 trillion in 2024. This included $442.7 billion in Treasury bonds and $658.5 billion in stocks.
So, what does this signify? It seems to suggest that despite what people think about President Trump, concerns regarding capital flight—essentially “selling America”—might be overstated.
Yet, there’s a more complicated issue on the horizon that needs attention. This involves America’s global investment landscape. As tech stocks have surged in recent years, an unsettling shift in the financial ecosystem has emerged. What might occur if this trend reverses?
The crux lies in what’s termed the Net International Investment Position (NIIP), which gauges the difference between U.S. owned foreign assets and foreign owned U.S. assets. Observers, including the Brookings Institution, keep an eye on this metric, although many non-economists (like Trump) often overlook it. Some economists think it might be skewed due to strategies aimed at corporate tax avoidance.
Currently, economists from the Bank for International Settlements, alongside MIT’s Christine Forbes, are working on improving simply how we understand the NIIP. Their findings are thought-provoking.
Take, for example, data from two decades ago when America’s NIIP was about -11 percent of GDP. This indicates that, after accounting for various deficits and asset values, non-Americans held a slightly greater value of U.S. assets than Americans did of foreign assets.
Fast forward to late 2024, and that negative NIIP has surged to about -91% of U.S. GDP. Interestingly, this doesn’t stem from trade deficits or foreign sales of U.S. Treasuries.
Instead, the primary issue is that from 2019 to 2024, U.S. stock indexes skyrocketed by 83%, while non-U.S. indexes only saw an uptick of 9%. This means that wealth has increasingly flowed to non-Americans holding American assets rather than the opposite.
As the negative NIIP in the United States skyrockets, countries like Norway, China, Japan, Canada, South Africa, and Sweden enjoy substantial positive NIIPs. These inequalities likely widened even more in 2025 as the U.S. stock market continued its ascent.
Is this concerning? Some economists might downplay its importance, arguing that the NIIP is just a theoretical notion. However, it’s noteworthy that Mr. Trump frequently applauds the booming U.S. stock market.
One takeaway here is this: if and when America’s tech bubble bursts, the repercussions will ripple well beyond U.S. borders. Forbes magazine has suggested that a return of U.S. stock prices and foreign direct investment to 2019 levels could lead to losses in investment returns for countries like Norway, Canada, Sweden, and China, equating to 20% to 40% of their GDP.
Additionally, we need to reconsider America’s so-called “extraordinary privileges,” as described by former French President Valéry Giscard d’Estaing. He often criticized how the dollar’s status as a reserve currency compels non-Americans to keep purchasing U.S. government bonds, even with the U.S. showing fiscal irresponsibility. This pattern resembles a form of subsidy, enabling the U.S. to exceed its economic limits.
Nevertheless, NIIP data reflects a troubling reality, essentially flipping these privileges into a “generous gift” from the U.S. to the world, as Forbes stated. Economists Andrew Atkeson, Jonathan Heathcote, and Fabrizio Perry similarly assert that any perceived benefits the U.S. might have enjoyed are effectively gone.
While non-Americans might not be paying this much attention, the crux is this: our global financial system is grappling with significant imbalances that often go unnoticed. Perhaps these will gradually realign if the dollar dips this year or if tech stocks falter, but it’s hard to say. As long as global investors continue to pour into the United States, we’re facing a world that’s quite lopsided.
