To Whom Does the U.S. Government Really Owe Money?

Back in January, we featured a post where we looked at who are the largest holders of the U.S. national debt. Since that time, the U.S. Treasury has revised their data, specifically to identify who the real foreign owners of the U.S. national debt are. Here are how things really stood at the end of the U.S. government’s 2010 fiscal year on September 30, 2010:

The main differences from the chart we previously featured are that China’s holdings are much greater, while the United Kingdom’s holdings are much smaller, which is a result of a number of Chinese institutions using banks in the United Kingdom as intermediaries for purchasing and holding U.S. government-issued debt. As a result, China’s real U.S. debt holdings now account for 9.5% of the entire U.S. national debt outstanding (nearly 1 out of every 10 dollars the U.S. government has borrowed), instead of the 7.5% that was previously recorded.

Meanwhile, the U.K.’s recorded holdings have shrunk by a corresponding 2.0% of the entire U.S. national debt as a result of this accounting adjustment.

Finally, one question that came up after our original post was “How much of the national debt held by U.S. individuals and institutions is owned by the U.S. Federal Reserve?”

We found that as of September 29, 2010, the Federal Reserve held 966 billion dollars of the U.S. national debt in the form of U.S. Treasury Securities or Federal Agency Debt Securities, which represents 16.9% of all U.S. individual or institutional debt holdings, or approximately 7.1% of the total national debt.

So when it comes to who owns the U.S. national debt, the U.S. Federal Reserve owns less than China does….

Notes

“All Other Foreign Nations” are all those except China (for which we’ve included Hong Kong), Japan, United Kingdom, Brazil and “Oil Exporters.”

“Oil exporters” include Ecuador, Venezuela, Indonesia, Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, the United Arab Emirates, Algeria, Gabon, Libya, and Nigeria.

The “U.S. Civil Service Retirement Fund” is the Federal Civil Service Retirement and Disability Fund. The “U.S. Military Retirement Fund” is the Department of Defense Retirement Fund. The “Social Security Trust Fund” is the Federal Old-Age Survivors and Disability Insurance Trust Fund.

Data Sources

U.S. Treasury Department. Monthly Statement of the Public Debt of the United States, September 30, 2010. Table III – Detail of Treasury Securities Outstanding, September 30, 2010.

U.S. Treasury Department. Major Foreign Holders of Treasury Securities. (At end of September 2010). Accessed 11 March 2011.

Board of Governors of the Federal Reserve System. Monthly Report on Credit and Liquidity Programs and the Balance Sheet, October 2010. Table 1. Assets, Liabilities, and Capital of the Federal Reserve System.

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