Much of the inflows were into either US treasuries or to US mortgage securities and related products, while a sizeable share of the outflow was foreign direct investment by US corporations. The US was able to earn relatively more on its stock of foreign assets than it paid on its foreign liabilities such that its net income position was often in surplus.
6 Some of the flows were “bad”, at least ex post, such as those which found their way into poor-performing securities. However, very few were able to identify ex ante the distortion that was generating these “harmful” flows. Other flows were clearly “good”.