Today, we're taking a
preliminary look at just who owns all the debt issued by the U.S. federal government
through 30 September 2012 - the end of the U.S. government's fiscal year. Our
chart below visualizes what we found.
The information presented
in our chart above is preliminary, as the U.S. Treasury typically revises its
foreign entity debt ownership data in March of each year.
Overall, U.S. entities
own just 65.8% of all debt issued by the U.S. federal government. Ranking the
major U.S. entities from low to high, we find that:
§ The U.S. government's
military retirement fund owns 2.4% of the national debt.
§ The U.S. government's
civilian employee retirement fund accounts for another 5.6% of the nation's
debt.
§ The U.S. Federal Reserve,
thanks to its quantitative easing programs of recent years, has racked up
holdings equal to 10.8% of the total U.S. national debt.
§ The U.S. Social Security
Trust Fund claims 16.7%.
§ U.S. individuals and
institutions, which includes regular Americans, banks, insurance companies and
other government entities, own 30.4% of the nation's debt.
Meanwhile, foreign
entities own 34.2% of all U.S. government-issued debt, with the following
nations' individuals and institutions representing the five biggest holders of
that debt, again ranked from low to high:
§ United Kingdom: 0.9%
§ Brazil: 1.6%
§ "Oil
Exporters", which includes Ecuador, Venezuela, Indonesia, Bahrain, Iran,
Iraq, Kuwait,Oman, Qatar, Saudi Arabia, Algeria, Gabon, Libya, Nigeria and the
United Arab Emirates: 1.7%
§ Japan: 7.0%
§ China (including Hong
Kong): 8.1%
All other nations hold
approximately 15% of the U.S. outstanding national debt.
The Role of Quantitative
Easing in Offsetting Foreign Ownership of the U.S. National Debt
The Federal Reserve's
various quantitative easing programs of recent years, where the U.S.
government-chartered central bank has purchased large quantities of U.S.
government-issued debt in its attempts to keep the U.S. government's spending
elevated and the U.S. economy stimulated by lowering long-term interest rates,
are especially interesting in the degree to which they've succeeded in
offsetting the share of the U.S. national debt owned by foreign interests.
Here, the Fed boosted its
holdings
of U.S. Treasury securities from a low of $474 billion on 18 March
2009 when it launched
QE 1.0 to a peak of $1.684 trillion on 21 December 2011, which
fell back to $1.676 trillion by 26 September 2012 - just before the end of the
U.S. government's 2012 fiscal year.
The Fed also boosted its
holdings of other federal agency debt
securities from $48 billion on 18 March 2009 to a peak value of
$169 billion on 10 March 2010, which has slowly declined to $83 billion as of
26 September 2012. All told, the Federal Reserve held an additional $1.21
trillion of the U.S. national debt compared to what it did before it began its
quantitative easing programs.
As a result, the U.S.
Federal Reserve has gone from holding 4.7% of all U.S. government-issued debt
as of 18 March 2009 to holding 10.8% of it as of the end of the U.S.
government's Fiscal Year 2012. During the peak of the program, the Federal
Reserve crowded out almost every other purchaser of U.S. government-issued
debt.
Assuming that other U.S.
entities would have been unable to accumulate more of the U.S. national debt
than they did during this period and that the U.S. government would have spent
as much money as it did, if not for the Federal Reserve's quantitative easing
programs, the share of the U.S. national debt held by foreign entities would
have increased to 41.7%, with the bulk of the foreign acquisitions going to
China.
As it stands, a little
over 1 out of every 3 dollars borrowed by the U.S. federal government is now
owned by foreign interests.
Data Sources
U.S. Federal Reserve. U.S. Treasury securities
held by the Federal Reserve: All Maturities. Accessed 14 January
2013.
U.S. Federal Reserve. Federal agency debt
securities held by the Federal Reserve: All Maturities. Accessed 14 January
2013.
Source:http://finance.townhall.com/columnists/politicalcalculations/2013/01/21/who-really-owns-the-us-national-debt-n1493555/page/full
Comments
I
liked this article because it gives an accurate picture of the debt and
predicts that the Federal Reserve will buy any Treasury Bills we are not able
to sell. The “Yield” or interest paid on
a 5 year note is 1.75%. Source: http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/Historic-Yield-Data-Visualization.aspx
Those
who buy Treasury Bills are usually beholden to the federal reserve or the
federal government. That’s why others
park their money there. They believe
their cash is save, but they know it won’t earn much interest.
In
the late 1970s, Treasury Bill returns reflected inflation and that was high, up
to 18% at one point, because the Federal Reserve let the market determine
interest rates in order to wring inflation out of the economy. Those days are over. Our federal debt is too big to allow interest
rates to rise. Also, our economy is in
the toilet and will remain there for the foreseeable future.
Our
national debt now sits at $17,555,437,713,940 as of April 2014, not the $16.027
trillion it was when this article was written in January 2013. The difference comes from the difference
between what the federal government spends and gives away versus what it
collects in taxes.
High
government spending damages the economy, so you must conclude that government
wants this weak economy. You must also
conclude that this government needs to be replaced with one that will cut
spending and allow the economy to finally recover. The excess spending is more than $1 trillion
per year, so it’s necessary to cut all unconstitutional departments, agencies
and expenses.
China’s
share of the debt is not the reason they are buying our energy companies. They are doing that to convert the dollars we
give them into tangible assets. They
expect the dollar to continue to decline in value against all commodities.
We,
on the other hand, are doing nothing that makes any sense.
Norb
Leahy, Dunwoody GA Tea Party Leader
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