The balance of payments records flows; the International Investment Position (IIP) records the stock they accumulate into — what U.S. residents own abroad, and what foreigners own in the United States.[1] When the rest of the world finances the U.S. current-account deficit, it builds up a stock of U.S. assets. What it holds — and how that composition has changed — is central to who ultimately profits.
Foreign holdings of U.S. assets, by instrument
Read by broad instrument, foreign-held U.S. liabilities split into direct investment (controlling stakes in U.S. firms), portfolio investment (corporate equities and bonds, and Treasury & agency securities), and other investment (loans, deposits, trade credit). In levels, all three have grown enormously; the chart below stacks them in USD trillions.
As a share of the total, the composition has shifted: portfolio investment has become the dominant channel through which the world holds U.S. assets.
Treasuries → equities: the rotation
Here is the thesis's sharpest claim, in the data. In the 1950s–1980s foreigners who bought U.S. securities overwhelmingly held Treasuries — safe, low-yield. Over later decades the composition rotated heavily toward U.S. corporate equities. By 2024 the rest of the world held roughly $16.9 trillion of U.S. equities against about $8.6 trillion of Treasuries.[2]
As a share of the total, the Treasury share falls and the corporate-equity share rises across the period — the explicit rotation that sits behind the return story on the next page.
These are real Federal Reserve Z.1 Financial Accounts, Rest-of-World series at market value
(Treasury securities, corporate equities, corporate & foreign bonds, and agency/GSE-backed
securities; FRED BOGZ1LM2630…), 1945–2025 — not the broad IIP split above, but the exact
instrument composition the thesis turns on.
Gross external assets vs liabilities
The net position (next page) is the small difference between two very large gross stocks — U.S. external assets and U.S. external liabilities — each of which has grown far faster than GDP with financial globalization.