Foreign ownership of the U.S. government debt

The Treasury has a table that shows the top fifteen countries that own U.S. government debt.

An interesting question that some have been asking is what will change with the much increased deficit that the so-called stimulus package will cause. Since the amount borrowed must equal the amount saved, this equation must hold:

(Private savings - private investment) + (Government surplus) + (net lending by foreigners) = 0

Currently the middle term is negative and will become much more negative. The final term is positive--we buy goods from foreign countries, and they use some of the proceeds to lend back to us, buying our debt. Among the things that a fiscal stimulus could do are:
a) Increase private savings--the traditional Keynesian multiplier argument. If fiscal spending increases income, people will save more.
b) Reduce private investment--one of the crowding-out arguments. If the government borrows, it may crowd out private borrowers, reducing investment.
c) Increase net lending by foreigners. One way for this to happen is for the value of the U.S. dollar to rise, reducing our exports and increasing our imports. A decrease in exports provides another way to crowd out the effects of fiscal policy. (A reason the value of the dollar might rise is that U.S. interest rates might rise above the level in other countries, causing a capital inflow.)

Those who argue for a fiscal stimulus package believe the first effect is important relative to the second and third. Those who argue against a fiscal stimulus usually believe that the first of these is unimportant relative to the second and third items.