Two weeks ago, the Federal Reserve released their first quarter’s report of money flow in the U.S., showing that we saved over 4% of our income and reduced our debts by about 3%. (p. 15) That’s the good news.

The bad news is that foreign investment in the U.S. has slowed to a relative trickle (p. 22). Although foreign investors bought Treasuries, they have been selling mortgage backed securities at a furious pace, unloading in 6 months what it took them the previous two years to accumulate.

Foreign investors have been selling both corporate and municipal bonds. There has been almost no net investment in the U.S. stock market. Without that extra buying pressure from foreign capital, the U.S. stock market is unlikely to move upward in any significant way.

For years Americans have relied on the savings of foreigners to support consumer borrowing, mortgages, business and municipal loans. Foreign investors still hold more than half of our federal debt. But foreign money is moving elsewhere. Now it’s up to us.