The right side of the equation repeats the familiar open economy identity that national saving equals private domestic investment, I, plus the accumulation of claims on foreigners or less that domestic investment financed by foreigners. As was noted earlier, borrowing from foreigners involves either a reduction of claims on them or an increase of claims on us by them.
It is by definition equal to the  1  As with all such talks, I am speaking for myself and not for other members of the Federal Reserve Board or the Federal Open Market Committee. BIS Review 12/2004  1  trade deficit TD.