The paper examines the financial balances of the US economy. Government is the main borrower and households and the foreign sector the main lenders. Business net lending is minimal. The balances and their underlying transactions contradict the loanable funds theory and its “global savings glut” variation. Keynes's liquidity preference theory is correct but, in its original formulation, overlooked government and foreign sector flows. The internal finance of business investment aligns with Kalecki's profit equation. The foreign deficit, tied to the dollar's role as a reserve currency, reflects systemic global demand for dollar assets, as explained by Triffin and Minsky.
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Michalis Nikiforos (2025) studied this question.
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