Monetary Apocalypsageddon Update: U.S. Debt to GDP Ratio Over 100 and and Rising

The always nerve-wracking and panic-inducing folk at ZeroHedge are alarmed by some recent U.S. debt news from a few days ago (and maybe you should be too):

Today, without much fanfare, US debt to GDP hit 101% with the latest issuance of $32 billion in 2 Year Bonds. If the moment when this ratio went from double to triple digits is still fresh in readers minds, is because it is: total debt hit and surpassed the most recently revised Q4 GDP on January 30, or just three weeks ago. Said otherwise, it has taken the US 21 days to add a full percentage point to this most critical of debt sustainability ratios: but fear not, with just under $1 trillion in new debt issuance on deck in the next 9 months, we will be at 110% in no time. Still, this trend made us curious to see who has been buying (and selling) US debt over the past year. The results are somewhat surprising. As the chart below, which highlights some of the biggest and most notable holders of US paper, shows, in the period December 31, 2010 to December 31, 2011, there have been two very distinct shifts: those who are going all in on the ponzi, and those who are gradually shifting away from the greenback, and just as quietly, and without much fanfare of their own, reinvesting their trade surplus in something distinctly other than US paper. The latter two: China and Russia, as we have noted in the past. Yet these are more than offset by... well, we'll let the readers look at the chart below based on TIC data and figure out it.

That the Fed is now actively monetizing US debt is beyond dispute (although some semantic holdouts remain - we are quite happy for them). Alas, with China, which has traditionally been the biggest buyer of US paper, no longer buying Treasurys, we are confident that the Fed will have no choice but to be dragged kicking and screaming once again into the fray....

So who is buying? Why Japan and the UK.

Japan and the UK? Hmm, if these two names sound oddly familiar, allow us to refresh one's memory. Behold the pristine leverage condition of both these two countries, in all its glory.

Hint: look at the far left.

So somehow the world's two most indebted countries (recall that Japan is about to in total pass 1 quadrillion debt) are out there and buying up the biggest amount of US debt (after the Fed of course)? Sorry, but while we are amusing by this attempt by the global ponzi regime to keep itself alive (even as Russia and China prudently step aside from the mauling that is sure to follow), whereby the most indebted nations keep buying each other's debt in the most transparent and potentially deadly shell game in history, we are also confident this is unsustainable. 

Peter Suderman wrote the other day about how various GOP candidates would, or would not, help quell the rise in U.S. debt.

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  • ||

    Wow/. It is just wow. This generation of policy makers is going to go down as the worst in history. They inherited the richest civilization in history and bankrupted it in just forty short years.

  • ||

    What's sick is that we might actually have a chance to fix things without insanely draconian measures. Just less government and less spending might do the trick.

  • Montani Semper Liberi||

    Less government is a worse proposition to politicians than monetizing the debt and hyperinflation. Power is addicting.

  • Tim||

    Obama 2016 : "no one could have predicted this..."

  • Hugh Akston||

    So what you're saying is you have no Serious ideas.

  • ||

    He really needs to shut up and let the adults talk.

  • ||

    The adulterated have spoken. Now it's time for some sane people. Too bad that's not likely to happen.

  • Nancy Pelosi||

    Are you serious? Are you serious?

  • ||

    The seeds were sown with the New Deal, John. We got a 40-year respite from paying for that shit while our competitors rebuilt.

  • Invisible Finger||

    We got a 40-years respite, but not for that reason. Competitors rebuilt in 10 years or less. It was Eastern Europe and parts of Asia that just plain decided NOT to compete because Socialism/Communism was such a superior system. We decide to keep doubling-down on he same system Eastern Europe and Asia started walking away from 20 years ago. Thank God the Japanese followed our lead, though they are probably blaming someone rather than praising right now.

  • Sevo||

    I'll only add that the 'big' unions of the '50s and '60s (the ones that got the iron rice bowl from the not-so-bright management) also kept domestic 'competition' out of the picture.
    The '64 CRB was 'required' since the unions made sure no blacks need apply.

  • ||

    Raise taxes! And when that doesn't work, raise them again! And when the rich try to leave the country, arrest them!

  • ||

    Lowering taxes along with cuts in spending would almost certainly get the economy going, which would make the debt less of an immediate issue. Of course, those reductions would have to be real ones, not the bullshit the government keeps proposing.

    I heard an accountant blast the administration's proposed reduction of the corporate tax rate as utter bullshit today, going so far as to say it was done with absolutely no knowledge of accounting, tax law, etc.

  • shrike||

    That accountant must depend on a lot of billable hours for the loopholes that would be eliminated by that tax cut plan.

    Like LIFO, for instance. Or the deduction on the life insurance scam by corporations.

  • ||

    No. In-house.

  • Killazonthrun||

    That passport with your name and identification, of which you also paid is owned by the government. Travel is not a right; it is a privilege.

    Paraphrasing a guy that I linked to yesterday.

  • ||

    You don't need a passport to leave the US, only to re-enter. Well, unless the country you're traveling to demands that you have a passport, but that's not the US govt's business.

  • ||

    You don't need a passport to leave the US, only to re-enter.,/i>

    I don't recall ever being allowed on an international flight without showing my passport first.

  • romulus augustus||

    No, no, look over there...it's global warming, the seas will rise in the next fifty years, etc. etc. And free condoms.

  • ||

    TEH GHEYZ ARE TRYING TO GET MARRIED!!!11oneoneone

  • Doctor Whom||

    Democrats: But ... but ... but ... Bush!

    Republicans: But ... but ... but ... 9/11!

  • Tim||

    Coke Machine 2020:
    Make Selection and insert payment. This machine accepts one thousand and five thousand dollar bills.

  • ||

  • Tony||

    Just raise taxes on the rich. That solves everything.

  • GW||

    Exactly!

    An income tax rate of about 350% would do the trick.

    All of our problems would be solved. We'd even have a surplus, and I think you should use some of it on math classes.

  • Doctor Whom||

    The next time the government gets an itch to redesign the currency, here's a good model:

    http://www.ebay.com/itm/ONE-EA.....1c1eab05d9

  • Montani Semper Liberi||

    You call that inflation? Hungary will show you inflation.

    When the pengő was replaced in August 1946 by the forint, the total value of all Hungarian banknotes in circulation amounted to 1/1,000 of one US dollar.[24] It is the most severe known incident of inflation recorded, peaking at 1.3 × 1016 percent per month (prices double every 15 hours).[25] The overall impact of hyperinflation: On 18 August 1946, 400,000,000,000,000,000,000,000,000,000 or 4×1029 (four hundred octillion (short scale)) pengő became 1 forint.

  • Old Mexican||

  • Jeffersonian||

    Wow, everyone in Zimbabwe must be super-rich. Look how much money that have!

  • ||

    I started collecting hyper-inflation currency starting with the 100 trillion dollar bill. They never fail to impress when I pull them out at any get together (most recently at the Ron Paul meetup in my county). They are interesting historical artifacts;each beautiful and tragic in its own way.www.milliondollarbabies.com is a good site for those interested in this subject. I paid around $5 each for the 100 trillion dollar notes from Zimbabwe Currency on Ebay and only regret I didn't get more because every libertarian and conservative friend has tried to buy one off me for at least twice what I paid for them. I also picked up 500,000 drachma (greece 1944), 1 million marks (germany 1923), 500 billion dinara (yugoslavia 1993)and 100,000 cruzieros (brazil 1993). All for a few dollars each.

  • Snake Plissken||

    I don't give a fuck about your war or your President.

  • ||

    I thought you was dead.

  • SIV||

    I assume this has already been discussed here?

  • Jeffersonian||

    You don't even need to read the headline, the pic sez it all.

  • shrike||

    Speaking of US Treasury allocation by country, Luxembourg owns an amazing $150,000 per resident of our paper ($82 billion) and they are buying.

    http://www.treasury.gov/resour.....ts/mfh.txt

    The doomers at ZeroHedge can't explain that.

  • Old Mexican||

    Re: shrike,

    Speaking of US Treasury allocation by country, Luxembourg owns an amazing $150,000 per resident of our paper ($82 billion) and they are buying.


    They're right there along with the Duchy of Grand Fenwick.

  • Old Mexican||

    Re: shrike,

    The doomers at ZeroHedge can't explain that.


    That's because they're not psychiatrists, shrikey.

  • Tim||

    "My life fades. The vision dims. All that remains are memories. I remember a time of chaos. Ruined dreams. This wasted land. But most of all, I remember The Road Warrior. The man we called "Max". To understand who he was, you have to go back to another time. When the world was powered by the black fuel. And the desert sprouted great cities of pipe and steel. Gone now, swept away. "

  • Snake Plissken||

    I'm thinking about it.

  • Fist of Etiquette||

    I'm banking on the the Martians soon being in the mood to buy.

  • ||

    makes sense, since they won't have acquired an understanding of ownership yet.

  • ||

    Just less government and less spending might do the trick.

    Your terroristic fulminations will not go unnoticed.

  • Dekedin||

    http://www.youtube.com/watch?v.....AAAAAAAAAA

    OT, but this video of Romney saying that his wife had a couple of Cadillacs was enraging. Not Romney, but the ide that being rich makes you unqualified to be president. Are you serious? i don't like Romney but NO president will ever truely identify with their constituents. And I don't care if Romney is different than me. DON'T VOTE FOR SOMEONE YOU WOULD LIKE TO HANG OUT WITH, VOTE FOR SOMEONE FIT TO BE PRESIDENT. Some people voted for Bush because they thought he was a cowboy, some people voted for Obama because he was cool. Those are awful reasons to vote for somebody. I don't care about how different Romney's life is from mine, all I should care about are his policies.

  • ||

    Cool story, bro.

  • ||

    The doomers at ZeroHedge can't explain that.

    As long as Alfred E Bernanke can continue to prop up the bond market, people will keep buying Treasuries. When interest rates simply cannot be contained any longer, there will be massive capital losses.

  • Old Mexican||

    Russia Dumps Treasurys For 14 Consecutive Months; China Slashes Holdings To Lowest In Over A Year


    "Follow the rats! They know which part of the ship is not sinking!"

  • ||

    +100(trillion)

  • Old Mexican||

    Peter Suderman wrote the other day about how various GOP candidates would [not "various"], or would not [yes "various"], help quell the rise in U.S. debt.


    "There can be only oneeee!!!!"

  • H man||

    And here I was thinking the preppers were a little nuts.

  • WarrenT||

    Six minutes on the debt as used to buy votes.
    http://www.youtube.com/watch?v.....redirect=1

  • toddb||

    Great video...I'm building a bunker...

  • ||

    You'd be hardpressed to find a fiscal apocalypsatarian more dismal than me, but I'm pretty sure that 100% number includes intra-governmental holdings (think: SocSec Trust Fund). Those are fantasy bonds on both ends, and shouldn't be counted, IMO.

    The number you want is the publicly held debt, which is somewhere in the 60% of GDP range (going by memory, here) and scheduled to hit 100% of GDP around 2018(?).

  • Invisible Finger||

    I'm just counting the days until government officials start using the term "strategic default" with utmost praise.

  • ||

    When the bond auction is an empty room bar a Xerox all alone printing...bzzzt-bzzzt-bzzzt...I wonder if that will be a 'teachable moment?'

  • ||

    Question: In charts like the one in the article, what does listing a country mean? Does it mean that the State Bank and/or government is buying US gov. bonds or does it mean that individuals resident in these countries are buying US gov. bonds?

  • ||

    Its central banks.

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