Correcting Robert Solow: Debt Owed to Foreigners Is Determined by the Trade Deficit, not the Budget Deficit

I hate to have to correct Nobel prize winners (okay, that's not true), but Robert Solow does get one item somewhat wrong in an otherwise useful column on the government's debt. Solow notes that close to half of the publicly held debt is owned by foreigners. He then tells readers:

"This part of the debt is a direct burden on ourselves and future generations. Foreigners are entitled to receive interest and principal and can use those dollars to acquire goods and services produced here. If our g...