The TRUTH About Who Really Owns All Of America's Debt

jetsetter

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Who owns America? Hint: It's not China

Editor's Note: The following piece comes from Global Post, which provides excellent coverage of world news - important, moving and odd.
By Tom Mucha, Global Post
Truth is elusive. But it's a good thing we have math.
Our friends at Business Insider know this, and put those two principles to work today in this excellent and highly informative little slideshow, made even more timely by the ongoing talks in Washington, D.C. aimed at staving off a U.S. debt default.
Here's the big idea:
Many people ? politicians and pundits alike ? prattle on that China and, to a lesser extent Japan, own most of America's $14.3 trillion in government debt.
But there's one little problem with that conventional wisdom: it's just not true. While the Chinese, Japanese and plenty of other foreigners own substantial amounts, it's really Americans who hold most of America's debt.
Here's a quick and fascinating breakdown by total amount held and percentage of total U.S. debt, according to Business Insider:


  • Hong Kong: $121.9 billion (0.9 percent)
  • Caribbean banking centers: $148.3 (1 percent)
  • Taiwan: $153.4 billion (1.1 percent)
  • Brazil: $211.4 billion (1.5 percent)
  • Oil exporting countries: $229.8 billion (1.6 percent)
  • Mutual funds: $300.5 billion (2 percent)
  • Commercial banks: $301.8 billion (2.1 percent)
  • State, local and federal retirement funds: $320.9 billion (2.2 percent)
  • Money market mutual funds: $337.7 billion (2.4 percent)
  • United Kingdom: $346.5 billion (2.4 percent)
  • Private pension funds: $504.7 billion (3.5 percent)
  • State and local governments: $506.1 billion (3.5 percent)
  • Japan: $912.4 billion (6.4 percent)
  • U.S. households: $959.4 billion (6.6 percent)
  • China: $1.16 trillion (8 percent)
  • The U.S. Treasury: $1.63 trillion (11.3 percent)
  • Social Security trust fund: $2.67 trillion (19 percent)
So America owes foreigners about $4.5 trillion in debt. But America owes America $9.8 trillion.

Continued @ http://globalpublicsquare.blogs.cnn.com/2011/07/21/who-owns-america-hint-its-not-china/

An interesting list.
 

Jacobfox

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Where the heck do they get that America owes America 9.8 trillion. It's a stretch to consider all of the various government entities owning T-bills as a single entity, but the notion that private investors are one and the same as various pension plans, state entities and the treasury is patently absurd.

Not to say that it doesn't make you think a little bit about where our debts are actually being held or the validity of the argument that China is our biggest creditor (and it is our largest extragovernmental creditor, and growing quickly to boot), but the statement that America owns 9.8 trillion of our own debt is misleading at best.

Can't blame the Chinese and the others for wanting to own T-bills. They're quite a stable investment, and hopefully will remain a stable investment after the debtpocalypse.
 

MacGuffin

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This shows it graphically (sorry, I only found it in German.

Remember: Billions in English = Trillions in German!!!


image-242023-galleryV9-wrmp.jpg


Dark Green = Federal Organizations
Light Green = Common inland debts
Red = Foreign debts


And here it is splitted into foreign creditors:
image-241775-galleryV9-ahmm.jpg


I was surprised, that the third biggest foreign creditor is actually Great Britain.
 
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HellPhish

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quantitative easing (printing money, moving stuff from one pocket to the other, etc), hows it work? :bangs head on wall:
we are what we call... screwed..
 

nomix

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You've taken on debt in your own currency, so to pay it back, it doesn't matter how much USD is worth. So you can print money, and pay it, and none of your creditors can stop you from doing it. Doing it all at the same time would probably make the dollar look like Zimbabwian Dollars.
 

WillDAQ

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Apparently you owe us $116million more than you did in the last one of these graphs.
 

HellPhish

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You've taken on debt in your own currency, so to pay it back, it doesn't matter how much USD is worth. So you can print money, and pay it, and none of your creditors can stop you from doing it. Doing it all at the same time would probably make the dollar look like Zimbabwian Dollars.
the general idea that i dont pretend to be an expert on is to devalue the dollar to make the debt worth less and therefore, easier to pay for.. problem is, that simply messes up everything else and makes it worse.
in reality, its... worse.. its more the track of the Wiemar Republic than Zimbabwe. last month, our inflation rate was .5-.6 percent (that would be 6-7% in a year). teh fed and the current admin screwed us.
 

WillDAQ

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If their heads would count as down payment of a quarter of our deficit then yes, but I fear we may need the $346billion for that.
 

nomix

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the general idea that i dont pretend to be an expert on is to devalue the dollar to make the debt worth less and therefore, easier to pay for.. problem is, that simply messes up everything else and makes it worse.
in reality, its... worse.. its more the track of the Wiemar Republic than Zimbabwe. last month, our inflation rate was .5-.6 percent (that would be 6-7% in a year). teh fed and the current admin screwed us.
I'm not passing judgement. I'm just explaining it as I've understood it. I for one believe economists were put on earth to make astrologers look good. It will be a question of putting inflation up against debt repayment. As it is now, I think the US has a managable debt, but it's very high, and it makes a lot of people think it can't be payed back. That's cobblers, a government has much better chances of paying back a huge debt than any private individual, to put it bluntly. Having debt is in itself not a problem, it becomes a problem if you can't repay it.

It reminds me, somehow, of the financial crisis a couple of years ago. Here in Norway, the petroleum fund invested in a lot of bad eggs. But those investments were indeed dwarfed by the good ones. The thing with a crisis in the stock market is that it reduces the liquidity of stock holders, and if you have not liquidity outside investments, and have to sell unprofitable stocks to pay the bills, then you're screwed.

On the other hand, if you've got liquidity, as the Norwegian government had, you don't have to sell. If you've got a lot of liquidity, you can even buy stock. As you're not selling the stocks that drops, you're not losing a single dime. Once you sell at a loss, or a business you've got stock in closes, that's a different matter.

Norway made bucketloads of money from the financial crisis. And the US can repay its debt over a longer period of time. It will be a little more expensive, but it is feasable.
 
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