Although the release is more than a month old, I missed the release. The US international investment position is worsening and in unsustainable territory.

Chart from the BEA release dated 29 December, 2020, with last data point from Q3, 2020:

It’s not plotted relative to gdp, but work that out in your head 😉

Wynne Godley’s analysis before 2008 was simple: the US private sector balance—the difference between private expenditure and private income—was negative continuously and was unsustainable. The reversal—private expenditure falling relative to private income—would lead to a large crisis. And meanwhile the US trade was also weak and a large fiscal stimulus would be needed but because of international trade, the fiscal multiplier won’t be large enough and the recovery would be weak. His papers also forecast rising negative net international position mirrored by large rise in public debt relative to gdp, so to keep a sustainable configuration, the US government should directly address international trade, or else face slow growth.

Wynne’s intuition was that:

… financial balances (relative to income flows) must stay within certain limits if debts are not to grow excessively, implying that the monitoring of these balances may yield a warning that unsustainable processes are at work.

Also, the “investment income” in balance of payments—the flows—stays positive. A lots has been written on it but on the question of sustainability it’s not too important in my view, although of course, once it turns negative it accelerates the already unsustainable position.