Intro Econ for WAPO: Foreign Holdings of U.S. Debt Depend on the Trade Deficit, not the Budget Deficit

Many deficit hawks are anxious to exploit nationalistic sentiments and even resort to crude xenophobia to push their agenda of cutting Social Security and Medicare. The starring role in this story goes to the foreign holdings (especially Chinese) of U.S. government debt. The Post did its part by having a chart showing the growth of foreign holdings of "our mountain of debt."

Those who are actually concerned about foreign holdings of U.S. government debt should know that it depends on the...