Via Mint, we get today’s dose of infoporn:

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Category: Credit, Taxes and Policy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

14 Responses to “Who Owns US Treasury Debt?”

  1. Marc P says:

    I’d like to see a similar chart of the change in the amount held by domestic holders since August 2008.

    Particularly ownership by the Fed, and I’d like to see a category for the holdings of the Primary Dealers.

  2. gordo365 says:

    Marc – I agree.

    I keep waiting to read about those “bank holding companies” that borrow funds at 0.25% – then buy treasuries and earn 3%.

    How much of whose profit is the result of this tax payer ripoff?

    BR – you need to update your 3-6-3 (borrow at 3%, lend at 6%, t-time at 3) model.

    0-3-6 (borrow from USA at 0%, lend to USA at 3%, earn $6M bonus)

    Gordo

  3. Super-Anon says:

    lol @ UK

  4. ewmayer says:

    LOL at the elephant in the room, “intragovernmental holdings.”

    A.k.a. “Money stolen from your social security payroll taxes and used by every administration for going on 30 years now – and yes,that includes Clinton and his famous mythical ‘balanced budgets’ and ‘surplus’ – to help paper over their structural deficits,and which will *never* – I repeat, never, – be repaid at anything approaching par in terms of inflation-adjusted dollars.”

    What an unbelievable fucking scam.

  5. Thor says:

    So it would appear from these charts that it is the Fed who is our banker – not China.

    Is there any reason why the Federal Reserve couldn’t just continue to buy up all this debt indefinitely? Is there any reason why they couldn’t just write off all that debt at some point in the future?

  6. Marc P says:

    @Thor:

    Absolutely. It’s called printing money.

    The scary thing is that there are government (and private) people of intelligence, experience and position who actually think that printing massive amounts of money is a good idea.

    The irritating thing is that the Fed is printing money and giving it to the Primary Dealers at 0% who then invest it in Treasury Securities. That way it doesn’t look like merely printing money, and it doesn’t look like a gift to the Fed’s shareholders, but the effect is the same.

    The sad thing is that the American press is too dumb to understand this, and the politicians are too clueless to understand the implications.

  7. scepticus says:

    Presumably the reason the fed owns so much US debt is that they have been engaging in 40 years worth of open market operations to lower the interest rates after each recession, and to fight off the mercantilist strategies of asia. And then there is the business of having to conduct open market ops to increase the base money supply in line with broad money increases.

    Lower rates and increases of the base money supply are achieved by buying government bonds….

  8. DL says:

    I’m interested in the composition of the debt, i.e., how much of it is of 2 years (maturity) or less; how much of 10 years or more. And particularly how much of the long-term debt is held by foreigners.

    At some point, holders of the long-term debt will get the shaft, just like holders of Greek debt did.

  9. scepticus says:

    At some point, all holders of debt including paper dollars will get the shaft.

  10. VennData says:

    And who owes the principle and interest to them?

    Why the people who wanted those something-for-nothing tax cuts. The supply side “economists.” the same ones who tell you that “small business” will suffer with a few percentage point increase in their marginal tax rate, you know the profits over 250K… not the revenues (like that Joe the Plumber thought) the profits. Hey you know how a “small business’ person can avoid that marginal tax? By spending they money.

    So before you go anti-Clinton on us, realize that he 1) was decreasing the debt 2) over saw a growing economy 3) raised rate on the rich (and it there was no subsequent recession.) Top marginal rates tax profits.

    And the President to thank is Reagan who cut taxes ok the rock and raised social security taxes ok the middle class AND the employment taxes on…. small business and we’ve been using Socia Security taxes to buy Treasury debt ever since.

    Thanks Reagan.

  11. Tao Jonesing says:

    @septicus,

    I believe that most of the Fed’s treasury holdings were incurred in the last two years as part of the effort to bail out the banks, but I could be wrong.

    @VennnData,

    If you need to blame a president, you need to blame every president from Reagan on, including Obama (not nearly as much, though). They’ve all engaged in the same monkey business in support of the Washington Consensus. Yes, Clinton at least made a good effort and produced a surplus, but he also oversaw the implementation of NAFTA, the repeal of Glass-Steagall, and the unleashing of an unbridled derivatives market. Reagan, Bush I, Clinton, Bush II and now Obama each have contributed to the current situation in his own way.

  12. Haigh says:

    >Reagan, Bush I, Clinton, Bush II and now Obama each have contributed to the current situation
    > in his own way.

    They all had much in common. They all supported price fixing interest rates.

  13. danny says:

    The only limit to how much money the primary dealers make is how much colateral they obtain in order to borrow with. Therefore greater government debt levels means higher cheap borrowing. But in the end who knows what happens in the OMO’s. Its possible the primary dealers are just getting money free its not like these activities are audited.

  14. obsvr-1 says:

    they get cash from the discount window (no collateral needed) pay .25% interest, loan it back to the treasury for 3+%, gov’t doesn’t need collateral as they have the full faith and credit of the US …

    banksters keep the spread as profit (but dont forget the value add that they are performing, they keep the FED independent of the treasury — yeah right !?