federal reserve biggest holder of US debt $6,328,000,000,000!

Discussion in 'Economics' started by S2007S, Feb 2, 2012.

  1. S2007S


    BUBBLE ben bernanke will add trillions more to this over the next few years.....

    Biggest Holders of US Government Debt
    CNBCBy Paul Toscano | CNBC – 23 hours ago

    As the U.S. government spends an unprecedented amount of money to fix the economy, there is an equally great need to raise the cash to pay for it. This is accomplished through borrowing, whereby Uncle Sam sells Treasury securities of varying maturity.

    For investors, government bills, notes and bonds are considered safe because they have a guaranteed rate of return, based on faith in future U.S. tax revenues. The government has been partially funding operations via Treasury securities for decades.

    This borrowing adds to the national debt, which has recently surpassed $15 trillion and is rising every second. The amount of debt is quickly approaching the federal debt ceiling, a legal limit to borrowing that currently stands at $16.4 trillion.

    Much of that debt is held by private sector, but about 40 percent is held by public entities, including parts of the government. Here's who owns the most. Foreign countries listed include private and public investors, according to monthly U.S. Treasury data.

    1. Federal Reserve and Intragovernmental Holdings

    U.S. debt holdings: $6.328 trillion

    That’s right, the biggest single holder of U.S. government debt is the Federal Reserve system. The Fed's system of banks and other U.S. intragovernmental holdings accounted for a stunning $6.328 trillion in U.S. Treasury debt in Spetember 2011 (the most recent number available). The amount is an all-time high as the Federal Reserve continues to expand its balance sheet, partially to purchase U.S. government debt securities.

    About a decade ago, the total government holdings were "only" $2.5 trillion.

    2. China

    Photo: DAJ RM | Getty ImagesU.S. debt holdings: $1.132 trillion

    The largest foreign holder of U.S. Treasury securities, China currently has $1.132 trillion in American debt, although it is down from all time highs of $1.173 trillion in July 2011. For more on China and currency, see CNBC Explains.

    3. Other Investors/Savings Bonds

    U.S. debt holdings $1.107 trillion

    With the most recent numbers from June 2011, this extremely diverse group includes individuals, government-sponsored enterprises, brokers and dealers, bank personal trusts, estates, savings bonds, corporate and noncorporate businesses for a total of $1.107 trillion.

    Although the level of debt held in U.S. savings bonds has remained basically constant since 2000, the broad category of "other" investors has nearly quadrupled since reaching a four-year low in December 2007.

    4. Japan

    Photo: APU.S. debt holdings: $1.038 trillion

    One of the U.S.'s largest trade partners, Japan is also one of the U.S.'s largest debt holders, currently owning $1.038 trillion in Treasury securities.

    5. Pension Funds

    U.S. debt holdings: $842.2 billion

    Pension funds control large amounts of money, reserved for personal retirements, and thus are obligated to make relatively safe investments. This group, which includes private and local government pension funds, holds $842.2 billion in U.S. debt. The private pension fund category also includes U.S. Treasury securities held by the Federal Employees Retirement System Thrift Savings Plan G Fund.

    6. Mutual Funds

    U.S. debt holdings: $653.5 billion

    According to the Federal Reserve, mutual funds hold the sixth-largest amount of U.S. debt compared to any other group, although mutual fund holdings have diminished by more than $105 billion since December 2008. Including money market funds, mutual funds and closed-end funds, this group of investments managed about $653.5 billion in U.S. Treasury securities as of June 2011, which are the most recent numbers available.

    7. State and Local Governments

    U.S. debt holdings: $484.4 billion

    U.S. state and local governments have nearly a half-trillion dollars invested in American debt, according to the Federal Reserve. The level of investment has remained stable since 2006, moving within the range of $484 billion and $576 billion. The current debt holdings, however, represent the lowest aggregate level for state and local governments since December 2005, when they stood at $481.4 billion.

    8. The United Kingdom

    Photo: Dominic Burke | Getty ImagesU.S. debt holdings: $429.4 billion

    The U.K. currently holds $429.4 billion in U.S. debt, but the country's investment has fluctuated dramatically during the past two years. Now at its all-time high (and rapidly increasing), British holdings were as low as $55 billion in June 2008.

    9. Depository Institutions

    U.S. debt holdings: $284.5 billion

    As of June 2011 (the most recent numbers available), the Federal Reserve Board of Governors lists depository institutions as holding about $284.5 billion in U.S. debt.

    This group includes commercial banks, savings banks and credit unions. In 2011, its holdings more than tripled from the 2008 low of $105 billion. Between June and September 2011, holdings for depository institutions fell by nearly $44 billion.

    10. Insurance Companies

    Photo: Sylvain LeprovostU.S. debt holdings: $250.1 billion

    According to the Federal Reserve Board of Governors, insurance companies hold $250.1 billion in Treasury securities. This group includes property-casualty and life insurance firms.
  2. Mvector


    Federalize the privately held federal reserve - bill privately held shareholders 10 trillion for financial crimes against America - write off all the remaining debt to fed - start from scratch! :cool:
  3. Not really a big deal. The money system will outlive everyone of us. Debt cieling... who cares? They will just lift it if needed.

    Goverment debt is not a big problem when you can do whatever you want, bend the laws, make new rules, borrow, etc.

    There's nothing to be scared of... over time they will recieve more than 20 trillion in taxes from our pockets.
  4. Bob111


    i'm really confused with this US monetary or whatever system..i just don't get it..who is the federal reserve? do they have any assets to back up their borrowing?
    the second thing -federal reserve is the one who printing the money,right? they print money with left hand and borrow with right one? it's like take money out left pocket of the pants and put them to right pocket. make no sense. at least to me..
  5. Not the Fed. The Fed AND others.
    Others = 4.7 trillion of that number (see http://www.treasurydirect.gov/NP/BPDLogin?application=np ) (the Fed after all only buys the stuff issued to the public, far as I know), so the actual amount held = 6.3 - 4.7 or about 1.6 trillion.

    Not chump change but not the number in your title by a pretty wide margin.
  6. I hope you're not this naive.... the federal reserve is the US goverment 'public' bank. They are borrowing based on guarantee they will collect taxes from US citizens.

    All they are actually doing is redistributing wealth: basically stealing from tax payers to give to 'institutions too big to fail'.

    Makes sense if you're rich, couldn't care about the public wellfare, and your buddies work at 'too big to fail'.
  7. Mvector


    Not from me - screw them!

  8. In the financial world an asset on one side of the balance sheet is a liability on the other, or in order for one to gain a financial asset one must incur a liability. The system is a zero sum game monetarily." One’s financial asset is necessarily offset by another’s financial liability. In the aggregate, net financial wealth must equal zero. However, real assets represent one’s wealth that is not offset by another’s liability, hence, at the aggregate level net wealth equals the value of real (nonfinancial) assets. To be clear, you might have purchased an automobile by going into debt. Your financial liability (your car loan) is offset by the financial asset held by the auto loan company. Since those net to zero, what remains is the value of the real asset—the car. In most of the discussion that follows we will be concerned with financial assets and liabilities, but will keep in the back of our minds that the value of real assets provides net wealth at both the individual level and at the aggregate level. Once we subtract all financial liabilities from total assets (real and financial) we are left with nonfinancial (real) assets, or aggregate net worth."


    If we break the economy into three groups: Domestic Private Balance, Domestic Government Balance , Foreign Balance then the simple formula would be correct.

    Domestic Private Balance + Domestic Government Balance + Foreign Balance = 0

    "For example, let us assume that the foreign sector runs a balanced budget (in the identity above, the foreign balance equals zero). Let us further assume that the domestic private sector’s income is $100 billion while its spending is equal to $90 billion, for a budget surplus of $10 billion over the year. Then, by identity, the domestic government sector’s budget deficit for the year is equal to $10 billion. From the discussion above, we know that the domestic private sector will accumulate $10 billion of net financial wealth during the year, consisting of $10 billion of domestic government sector liabilities."

    - In general, you’ll notice that when the private sector saves (when the blue bar is positive), the government runs a deficit (red bars are negative).

    - The green bars represent the foreign sector, and when they are included with the government and private balances, you can see that everything adds to zero: all positive balances (above the zero line) are offset by negative balances of the exact same size (below the zero line).

    - Take note that from the 80’s onward the foreign sector bars generally appear on the positive side, indicating a trade deficit for the US (like in our example above). In other words, they are holding onto our dollars, and so, like our own domestic savings, these dollars in foreign hands must be offset by increased private or government deficits (or both).

    - Take a look at the brief moment in the late 1990s when the red bars peak above the zero-line. These were the famed Clinton-era budget surpluses. While everyone was quite happy at the time, you can see that these surpluses necessarily coincided with a huge increase in private-sector debt.

    - Also note the huge increase in private-sector debt during the housing boom (roughly 2004-2008). In this case there was no corresponding government surplus. You have the foreign trade deficit to thank for this—the dollars that left the private sector didn’t go to the government, they went overseas.

    There is a correlation between debt reduction and depression.
    "The United States has also experienced six periods of depression. The depressions began in 1819, 1837, 1857, 1873, 1893, and 1929. (Do you see any pattern? Take a look at the dates listed above.) With the exception of the Clinton surpluses, every significant reduction of the outstanding debt has been followed by a depression, and every depression has been preceded by significant debt reduction. The Clinton surplus was followed by the Bush recession, a speculative euphoria, and then the collapse in which we now find ourselves. The jury is still out on whether we might manage to work this up to yet another great depression. While we cannot rule out coincidences, seven surpluses followed by six and a half depressions (with some possibility for making it the perfect seven) should raise some eyebrows. And, by the way, our less serious downturns have almost always been preceded by reductions of federal budget deficits. I don’t know of any case of a national depression caused by a household budget surplus.”

    National Bank Act of 1863

    "From this point on the entire US money supply would be created out of debt by bankers buying US government bonds and issuing them from reserves for bank notes...In numerous years following the [Civil] war, the Federal Government ran a heavy surplus. It could not (however) pay off its debt, retire its securities, because to do so meant there would be no bonds to back the national bank notes. To pay off the debt was to destroy the money supply.". - John Kenneth

    " In order to keep money in the system, some major player has to incur substantial debt that never gets paid back; and this role is played by the federal government." - Ellen Brown, Web of Debt

    "It is important to stress that not all monetary debts are expected to be repaid, particularly that component which is used as society's money base. If the U.S. Government repaid its entire federal debt, the nation would have no currency. Thus, a given proportion of society's monetary debt is a de jure but not a de facto liability: nobody ever expects a government to repay its domestic debt, merely to roll it over and refinance it. " Micheal Hudson: Global Fracture 2005

    "In the 1890's the U.S. Government's tariff revenues enabled it to begin repaying its outstanding debt. This created a shortage of bonds needed by banks to hold as backing for their note issue. The national currency contracted and monetary panic insued. Thus, it can hardly be claimed that it is in society's best interest for a government to repay all its debt. Still, monetary cranks periodically warn of an imminent economic collapse on the ground that society has let its government become insolvent by issuing liabilities (its currency and Treasury bills) in excess of its short-term capacity to pay, as if it would ever be called upon to do so." Micheal Hudson: Global Fracture 2005


  9. Here is how our money system basically works. The Treasury prints little pieces of paper call t-bills and exchanges them with the Federal reserve for the little pieces of paper called Dollars that the Fed prints. Both parties want their pieces of paper back eventually so when the treasury starts to run out of those pieces of paper they got from the fed, they print up more paper to exchange with the fed for their paper so they can pay back the paper they originally traded with them.

    Seems pretty legit to me.