America’s $28 trillion problem: The Fed just said foreign investors now own way more of the US than it owns of them

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“Easy money” is getting harder to come by.

That’s a major implication in the Federal Reserve Bank of New York’s latest research showing a $28 trillion gap between what the U.S. owns in overseas assets versus what foreign investors hold. Currently, the U.S. has $41 trillion in foreign assets, but overseas investors have a much larger $69 trillion in U.S. assets (1).

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For perspective, the Fed wrote that this $28 trillion deficit represents 90% of the nation’s current GDP, which stands at $31.82 trillion per the Joint Economic Committee’s May 28 release (2).

The baffling thing is that this setup has worked for the U.S. for a long time. America had been earning more from its investments abroad (such as profits, dividends and interest) than it paid out to foreign investors on U.S. assets.

In the Fed’s terminology, this “rate of return advantage” helps explain how the “U.S. income balance has seemed to defy gravity” even as liabilities grew, according to the initial report.

The worry today is that this income surplus is shrinking.

Back in 2019, the Fed noted a “surplus [of] $260 billion.” All of that wiggle room was wiped out to “near zero in 2024 and 2025.”

These scary trends led the Fed researchers to conclude that payouts on U.S. assets have become a “servicing burden for the U.S. economy.” Instead of those foreign dividends or profits working in favor of Americans, it’s all going to this Everest-sized mountain of debt.

How America’s financial cushion crumbled

There are multi-layered reasons why the U.S. landed in this mess, but the Fed specifically pointed to two.

First: The sharp rise in interest rates after the COVID-19 pandemic.

As the Fed aggressively raised rates to fight inflation, the cost of paying income to foreign investors rose alongside them. That’s a big deal because foreign investors own such enormous amounts of U.S. debt and interest-paying assets, like Treasury bonds and corporate securities.

When rates were near zero, those payments stayed relatively manageable. Higher rates changed the math very quickly.

As the Fed authors wrote, “The U.S. position in interest-bearing assets … has generated large income deficits since prior to the 2008 financial crisis.” For instance, the interest balance took out $450 billion from the income surplus in 2025 alone.

The second reason the Fed mentioned was the “continued net sales of U.S. assets to foreign investors.”

On this point, the Fed noted a few factors, including the wide trade deficit as the U.S. brings in far more than it sends out. That imbalance between imports and exports alone amounts to $5.5 trillion in “deterioration.”

The raging bull run for U.S. equities is also helping to inflate overseas portfolios. Apollo Global Management recently found that foreign investors control 18% of the U.S. stock market (3).

All these factors put together mean one simple thing: The world owns far more of the U.S. than the U.S. owns of the rest of the world. But what does that mean for the average American?

How overseas debt hits home

All this talk about international investment accounts can feel detached from day-to-day life, but it does affect everyone’s financial realities.

As America’s obligations to the rest of the world become more expensive, the entire system is extra sensitive to the slightest pressures. That likely means consumers won’t catch a break anywhere anytime soon.

Higher mortgage rates

We already see plenty of signs of this strain on U.S. families. For instance, mortgage rates aren’t likely to fall. Quite the opposite: the average contract interest rate for 30-year fixed-rate mortgages roared to 6.56% in late May (4) — the highest level since August 2025. That’s a far cry compared to the sub-3% rates many homeowners locked in during 2020 and 2021 (5).

But there are ways to save. The key is not to accept the first offer on the table — shop around and get quotes from at least two to three lenders. Research shows borrowers who take the time to compare offers and secure the best available rate can save an average of $62,572 over the life of a 30-year fixed mortgage (6).

And platforms like Mortgage Research Center make it easy for you to shop around from the comfort of your home for free.

Here’s how it works: Enter some basic information about yourself, such as property type and zip code in which it is located, total cost, desired down payment and your annual income and credit score. From there, Mortgage Research Center then matches you with lenders best suited to your needs.

You can then set up a free, no-obligation consultation to further assess whether they’re the right fit for you.

Persistent inflation

Then there’s the ever-present boogeyman of inflation. A rising federal debt and larger interest payments increase the need for borrowing, which means there’s still a persistent upward pressure on the prices for goods.

At the same time, economic uncertainty remains elevated. With the conflict involving Iran now in its third month, concerns about energy markets, global trade and broader economic stability have weighed on consumer confidence, pushing consumer sentiment to record lows (7).

In an environment where purchasing power is under constant pressure, investing in assets with the potential to generate returns that outpace inflation over time may be beneficial.

Bet on inflation-proof assets

Gold, in particular, has long been viewed as a popular inflation hedge because it doesn’t move in lockstep with stocks or bonds. When equities stumble amid inflation, geopolitical tensions, or broader economic uncertainty, investors often turn to gold as a store of value.

One way to invest in gold that also provides significant tax advantages is to open a gold IRA with the help of Priority Gold.

This way, you can hold physical gold or gold-related assets within a retirement account, which combines the tax advantages of an IRA with the protective benefits of investing in gold.

If you opt for Priority Gold’s platinum package, you can get free account setup and insured shipping and storage for up to five years. Plus, you can also roll over your existing IRA or 401(k) into a precious metals IRA with Priority Gold — tax and penalty-free.

And when you make a qualifying purchase with Priority Gold, you can receive up to $10,000 in precious metals for free. Just keep in mind that gold is often best used as one part of a well-diversified portfolio.

Real estate offers another avenue for inflation protection. As building costs, labor expenses, and land prices rise, property values often move higher as well. Rental income also tends to increase over time, giving you a potential stream of cash flow that keeps pace with rising living costs.

The good news is you don’t necessarily need to buy a rental property outright to gain exposure. You can invest in shares of single-family rental homes nationwide through platforms like mogul.

Founded by former Goldman Sachs real estate investors, mogul handpicks the top 1% of single-family rental homes nationwide for you. This way, you can invest in institutional-quality offerings for a fraction of the usual cost — while receiving monthly rental income, real-time appreciation, and tax benefits.

The team at mogul carefully vets each property, requiring a minimum 12% return even in downside scenarios. Across the board, the platform features an average yearly return of 18.8%. Their cash-on-cash yields, meanwhile, average between 10% to 12% annually. With investments typically ranging between $15,000 and $40,000 per property, offerings often sell out in under three hours.

Getting started is a quick and easy process. You can sign up for an account and then browse available properties. Once you verify your information with their team, you can invest like a mogul in just a few clicks.

Rising household debt

In a way, the foreign debt burden mirrors how reliant everyday Americans are becoming on debt to fuel their lives. The Fed reported that U.S. household debt reached a record of $18.8 trillion in 2026 (8). According to KPMG, that’s up about 32% since the COVID-19 pandemic (9).

For those carrying balances across multiple credit cards or other high-interest loans, that debt can become increasingly difficult to manage as interest charges pile up month after month.

If high-interest debt has become difficult to manage, debt consolidation may be worth exploring.

You can combine multiple balances into a single personal loan through platforms like Credible.

This way, instead of juggling multiple monthly payments, you’ll have one predictable payment to manage each month.

You can find personal loans starting at 5.96% APR. Credible also offers a best rate guarantee — and if you close with a better rate than you prequalify for on the platform, you’ll get a $200 gift card.

— With files from Eric Esposito

America’s $28 trillion problem: The Fed just said foreign investors now own way more of the US than it owns of them

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How America’s financial cushion crumbled