Skip to content  Money Leaving the Country  April 11, 2012  When
an American buys foreign goods using U.S. dollars, the
foreigners cannot use the dollars for domestic consumption; they
must use their own native currency. They must turn around and
either store the currency, buy investments in U.S. companies,
buy U.S. exports, or buy U.S. government bonds. Blaming the out-
group for our problems feels good, but isn’t supported by
economic theory.  Storing the Currency About $200-$250 billion
dollars were stored abroad in the form of currency, as of 1995.
As the total amount of currency circulating has approximately
doubled since then too, I would guess that the amount of
currency held by foreigners is around $500 billion. At first
glance, it may seem as if more money for foreigners means less
for the U.S., but this is not the case under a fiat money
system. What matters for stabilizing U.S. inflation/GDP is not
the total amount of dollars existing in the world, but the
amount (and speed) of dollars circulating i