Who Really Owns the U.S. National Debt? (Final Edition for FY2012!)

The U.S. Treasury Department has revised its estimates of the foreign ownership through the end of Fiscal Year 2012, which means that we can now finalize our picture of just who the major holders of the 16.027 trillion dollars of the outstanding U.S. government debt issued through 30 September 2012 are:

Overall, U.S. entities own 66% of all debt issued by the U.S. federal government. Ranking the major U.S. entities from high to low, we find that:

• U.S. individuals and institutions, which includes regular Americans, banks, insurance companies and other government entities, own 30.5% of the nation’s debt.
• The U.S. Social Security Trust Fund claims 16.7%.
• 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. government’s civilian employee retirement fund accounts for another 5.6% of the nation’s debt.
• The U.S. government’s military retirement fund owns 2.4% of the national debt.

Meanwhile, foreign entities own 34% 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 the highest to lowest share of ownership:

• China (including Hong Kong): 7.9%
• Japan: 7.0%
• “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%
• Brazil: 1.6%
• United Kingdom: 0.9%

All other nations hold approximately 15% of the U.S. outstanding national debt.

The Federal Reserve’s Growing Share of the U.S. National Debt

Following President Obama’s being sworn into office on 17 January 2009, the U.S. national debt has grown by over 51%, or by 5.4 trillion dollars to $16.066 trillion at the end of the U.S. government’s 2012 fiscal year on 30 September 2012.

Thanks to 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, the Federal Reserve “loaned” the U.S. government over half that amount.

Here, the Fed boosted its holdings of U.S. Treasury securities from a low of $474 billion on 18 March 2009 when it launched its first quantitative easing program 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 has 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.

Consequently, the U.S. Federal Reserve has gone from holding less than one-twentieth of all U.S. government-issued debt as of 18 March 2009 to now holding nearly one-ninth of it as of the end of the U.S. government’s 2012 fiscal year. During the peak of its quantitative easing programs, the Federal Reserve succeeded in crowding out almost every other potential purchaser of U.S. government-issued debt.

This analysis does not reflect the results of the Fed’s most recent round of quantitative easing, which it first announced on 13 September 2012, then later expanded on 12 December 2012.

At present, the Federal Reserve is accumulating U.S. government issued debt in the form of mortgage-backed securities, such as those issued by government-supported enterprises like Fannie Mae and Freddie Mac, at a rate of roughly $40 billion per month while also accumulating U.S. Treasuries at a rate of $45 billion per month. In March 2013, the Fed’s combined acquisition rate of $85 billion per month for U.S. government-issued debt accounted for 56% of the net increase in the U.S. national debt recorded during the month.

The U.S. National Debt Halfway in Fiscal Year 2013

Through 29 March 2013, the halfway point of the U.S. government’s 2013 fiscal year, the total public debt outstanding of the United States has grown to $16.771 trillion – an increase of more than $744 billion in just six months time.

Meanwhile, on 3 April 2013, President Obama pledged to donate an amount equal to 5% of his $33,333 per month salary as President of the United States of America to the U.S. Treasury, which only accepts such voluntary payments to “help reduce the public debt”. Nearly a year earlier, on 10 April 2012, the White House’s official spokesman Jay Carney described such a gesture as a “gimmick” when proposed by opponents of the President’s ongoing calls for higher taxes, which the President later succeeded in obtaining on 3 January 2013.

Data Sources

U.S. Federal Reserve. U.S. Treasury securities held by the Federal Reserve: All Maturities. Accessed 15 March 2013.

U.S. Federal Reserve. Federal agency debt securities held by the Federal Reserve: All Maturities. Accessed 14 January 2013.

U.S. Treasury. Major Foreign Holders of Treasury Securities. Accessed 14 January 2013.

2013-04-09 06:04:58

Source: http://politicalcalculations.blogspot.com/2013/04/who-really-owns-us-national-debt-final.html