“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 $31.85 trillion per the Joint Economic Committee (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 (1).

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. (1)”​

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 (1).

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 said, “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 (1).

The second reason the Fed mentioned was the “continued net sales of U.S. assets to foreign investors (1).”

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 (1).”

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?​

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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.

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: Reuters reported that these rates roared to above 6.5% (4). That’s a far cry compared to the sub-3% rates many homeowners locked in during 2020 and 2021 (5).​

And 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.

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 trillion in 2026 (6). According to KPMG, that’s up 32% since the COVID-19 pandemic (7).

While all this doesn’t mean the U.S. is going to collapse tomorrow, it does show the era ahead will look less like the “easy-money” economy a few decades ago. As foreign debt matters more, everyone’s pocketbook will take a hit.

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Federal Reserve Bank of New York (1); Joint Economic Committee (2); Apollo Academy (3); Reuters (4); Federal Reserve Bank of St. Louis (5); Federal Reserve Bank of New York (6); KPMG (7)

This article originally appeared on Moneywise.com under the title: 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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