I guess I’m going to have to write more about David Stockman’s unfortunate rant, since a lot of people who should know better seem to think he made serious points. Right now, however, I just want to lay down a marker on an issue I really really do know something about: America as a net international debtor.

Stockman describes a horror show:

Then came Lyndon B. Johnson’s “guns and butter” excesses, which were intensified over one perfidious weekend at Camp David, Md., in 1971, when Richard M. Nixon essentially defaulted on the nation’s debt obligations by finally ending the convertibility of gold to the dollar. That one act — arguably a sin graver than Watergate — meant the end of national financial discipline and the start of a four-decade spree during which we have lived high on the hog, running a cumulative $8 trillion current-account deficit.

Leave the goldbuggery aside (does Stockman think that countries pegged to gold — or, for that matter, the euro — never run current account deficits?). Are things as bad as he says?

Well, the $8 trillion number is right. But while it may be EIGHT TRILLION DOLLARS, that’s a cumulative deficit (which began in the 80s, by the way, not the 70s) of only half of this year’s GDP. And if you know anything about the subject, you know that America’s debtor position isn’t actually that deep, because of capital gains (which aren’t counted in the current account):

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But OK, market valuations are one thing, what about income flows? Aren’t we now paying a lot in interest to foreigners? Ahem. Here’s US net international investment income — income from US assets abroad minus income payments on foreign assets in the US — as a percentage of GDP:

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Now, that surge at the end is crisis-related: America tends to issue debt while buying equity and real assets abroad, so the plunge in interest rates has pushed up our net investment earnings, and this will go down again if and when we recover. Prior to the crisis, the trend was clearly down. But we’re talking about fairly modest numbers, with America still earning more than it pays. This is the result of an epic spending spree, four decades of living high on the hog?

But of course you don’t check out these numbers if your purpose is to scare readers by talking about EIGHT TRILLION DOLLARS.