This article has an excellent overview of the competing theories about what’s going on with the US current account deficit, and the implications on the housing market, savings rates, and everything else under the sun. Possible outcomes range from a run on the currency followed by Argentina-style collapse to everyone’s actually just equalizing their global investment allocation, and it’s nothing to worry about.
Something the article doesn’t address directly but is (imo) the most looming structural problem with the debt (that is, a problem inherent and not in fear of collapse due to terrorism, or geopolitical manipulation) is that this works for the world because America is the world’s great consumer. China buys dollars, sells Americans the stuff China manufactures for 10x it’s value, reaps the profit, buys more dollars, spends more on investments, ect. In other words our structural global value is maintained as long as we remain such a large consumer of goods. The Harvard economists say that China should be re-investing it’s dollars into stimulating domestic growth instead of capacity; but the problem is that if and when China and/or India reach a point where they can consume some 1x or 2x America’s consumption the value of American consumption becomes far less important, and the collapse then of the dollar seems inevitable.
It’s a trap! Foreign investments predicated on American consumption, propping up the dollar, cause an flow of money into exporting nations, till the point where those nations can afford to consume their own production - at which point the need to prop up America greatly diminishes.