As the stock of such claims grows, an ever-larger flow of interest payments must be provided to the foreign suppliers of this capital. Countries that have gone down this path invariably have run into trouble, and so would we. Eventually, the current account deficit will have to be restrained.
The nation's economic potential will be brighter if that comes about through an increase in domestic saving rather than a reduction in domestic investment. A more contentious issue is whether the mix of domestic private and government saving affects the rate of productivity growth. Another is whether the form of private saving--for example in stocks or debt instruments including bank deposits--affects productivity growth.