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 here 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: Townhall Finance.com
Comments:
In January 2013, foreign nations owned 34.2% of U.S. federal government debt, but were posturing to reduce their exposure to the dollar.
30.4% owned by individuals and institutions includes pension plans, but the stock market bubble enticed many to pull back on T-Bills and stay with stocks. Pensions are vulnerable to stock market crashes. Another
21.7% is U.S. government retirement and social security. The Fed owns 10.8% and I expect The Fed will
pick up the slack if others pull out.
The $1.02 trillion a year the Fed is
printing will cover the federal budget deficit plus the slush fund. The key to
cooling the money printing without taking out the 401k plans is to reduce
actual federal spending by $600 to $800 billion a year. Are we ready guys ?
Norb Leahy, Dunwoody GA Tea Party
Leader
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