Balance on current account. Item 7 reflects the fact that historically the United States has been

A net international lender. Over time it has invested more abroad than foreigners have invested in

The United States. Thus net investment income represents the excess of interest and dividend payments

Which foreigners have paid the USA for the services of American exported capital over what

They paid in interest and dividends for their capital invested in the United States. Table 9 tells us

that, on balance, the net investment income earned the USA $14 billion worth of foreign currencies

for “exporting” the services of American money capital invested abroad.

Item 8 reflects net transfers, both public and private, from the United States to the rest of the

World. Included here is American foreign aid, pensions paid to Americans living abroad, and remittances

of immigrants to relatives abroad. Note that these $14 billion of transfers are “outpayments”

And exhaust available supplies of foreign exchange..

By taking all the transactions in the current account into consideration we obtain the balance on

Current account shown by item 9 in Table T.14.1. In the given year, the United States realized a

current account deficit of $161 billion. This means that the American current account import

Transactions (items 2, 5, and 8) created a demand for a larger quantity of foreign currencies than