Don’t worry about it.

There are plenty of genuine economic problems without inventing artificial ones. The image of Uncle Sam as a giant global debtor implies that, like Mexico or Argentina, we have gone massively in hock with the rest of the world and are at the mercy of our overseas creditors. It just isn’t true. Our future prosperity hasn’t become hostage to foreigners. It still depends mostly on what we Americans do here at home.

Let’s see why. Consider this column as an exercise in economic literacy. Every so often, it’s worth inspecting our cliches to see what, if anything, they mean. Ask basic questions about our being a global debtor, and you discover that it’s less menacing–and more complicated–than is commonly supposed.

No. The analogies are alarmist. Our debt differs from theirs in three important ways. First is the size. What counts–for people, companies and countries–is the relation between debt and annual income (for countries, gross national product) or wealth. In 1989, Mexico’s foreign debt was $96 billion, or 51 percent of its GNP. Argentina’s debt was $65 billion, or 120 percent of GNP. Sure our debt is bigger, but so is our GNP. In 1990, our foreign debt equaled 7.5 percent of our GNP of $5.465 trillion.

A second difference is that our debt is in our currency; we owe dollars to foreigners. The overseas debts of most developing countries are also in dollars, but they have to earn those dollars by exporting. In theory, we could repay our overseas debts by printing more dollars. Inflating our way out of debt would be stupid; it would damage our economy. But the possibility shows that we’re not at the mercy of foreign creditors.

Finally, our debt is not really a “debt” in the sense, for example, of a home mortgage. In 1990, Americans (companies and individuals) owned $1.764 trillion worth of assets abroad - plants, bonds, stocks and real estate. Meanwhile, foreigners owned $2.176 trillion of assets in the United States. It’s the difference between these two figures ($412 billion) that’s commonly referred to as our overseas debt. And it’s getting worse. In 1982, we actually had a positive “net international investment position” of $364 billion. But you have to remember that today’s negative number is not a loan that has to be repaid.

Yes and no. Clearly, the balance of global economic power has shifted. The United States has lost its huge dominance. In the 1960s and 1970s, most Japanese companies weren’t competitive enough to build U.S. plants. The Japanese weren’t rich enough to buy many U.S. securities. Some Europeans had big U.S. investments, but the main overseas investors were American. Now that’s changed.

But foreign investment in the United States isn’t a sign of weakness. Why should foreigners build plants in a collapsing economy? Why would they buy its stocks and bonds? The surge of foreign investment here in the 1980s occurred mainly for three reasons: the lifting of restrictions in Japan and other countries against investing abroad; high U.S. interest rates, which made dollar bonds attractive; and a strong economy with low inflation.

Don’t hold your breath. Every red-blooded American gets itchy about the growing foreign presence, and the $2.2 trillion total seems huge. But America is also huge. The Commerce Department estimates the value of all “tangible wealth” (excluding land) at $24.7 trillion: $8.8 trillion of business buildings and equipment, $11.1 trillion of housing and consumer goods (cars, appliances) and $4.8 trillion of government property. Land values probably add $4 trillion. Yes, foreigners own a whopping $231 billion of U.S. corporate stocks - more than 10 percent of their overall U.S. stake. But the figure is dwarfed by the total value of all U.S. stocks, about $4 trillion.

Not really. Sending foreigners dollars won’t much affect U.S. living standards unless foreigners spend the dollars to buy U.S. exports and services–and that might actually stimulate the economy. It’s possible that foreigners might not spend the dollars in the United States, because the dollar is the main global currency used for buying and investing around the world. If they don’t want to keep the dollars, they sell them for other currencies (the German mark, for instance). The dollar’s exchange rate falls, making U.S. exports more competitive and imports here more expensive. Our exports rise, and dollars are repaid to us.

Consider this example: the U.S. overseas debt is $500 billion; foreigners earn a 10 percent return, or $50 billion annually; they don’t want to keep any of their earnings in dollars. We could service this debt with a trade surplus of $50 billion, about 1 percent of GNP. That’s hardly crushing. (Indeed, the huge U.S. trade deficits of the 1980s reflected the mirror image of this phenomenon. The foreign demand to invest in the United States and to buy dollar securities raised the dollar’s exchange rate and depressed U.S. exports.)

The message here is simple. We need to worry about the right economic problems, and being a global debtor isn’t yet one of them. What matters are old-fashioned things: the productivity of U.S. firms and workers; maintaining low inflation (if we don’t, foreigners will dump dollars). These will shape future living standards and prosperity.

People may still rant and rave about the evils of our being a great global debtor. But now you know something they don’t: it’s mostly sound and fury.