The U.S. trade deficit reached record levels in 2006 and remained high in 2007–2008.
Recall, NX = S – I = NCO.
A trade deficit means I > S, so the nation borrows the difference from foreigners.
In 2007, foreign purchases of U.S. assets exceeded U.S. purchases of foreign assets by $775 million.
Such deficits have been the norm since 1980…