Menzie Chinn Watches the Turnaround of the U.S. Current Account

The U.S. current account turns around:

How far does it have to turn around? One unresolved issue is how much of the oil trade deficit will ever have to be repaid--if oil wealth is going to be invested in the U.S. in dollars in order to give princelings and dictators a political-risk insurance policy, the oil part never has to be "paid back" in a foreign-exchange sense. If foreign oil wealth is going to be used to buy imports of capital goods and raw materials from the U.S., to fuel industrialization, the answer is quite different...