Government Spending

Who Owns U.S. Debt? You & Me, Mostly…

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Here's a chart compiled by the folks at Political Calculations that plots out to whom the federal debt is owed. It's a bit outdated, as it's based on figures from the end of last fiscal year. But the percentages are surely about the same even though the current total debt has hit the $14.3 trillion or so level.

All told, it's looking like 70 percent of the debt is held by domestic suckers and by elements of our trusted and trustworthy government.

I don't know that that is a comforting thought. It might be if the cumulative total were much, much smaller. As it stands, it's all just appalling on any number of levels.

Earlier today, Veronique de Rugy explained on C-SPAN why we won't default on the debt and elsewhere she's discussed how the debt ceiling is not the fiscal tripwire Tim Geithner and others say it is. Though de Rugy and others point out that at some point—and sooner rather than later—the borrowing has got to stop. And it will, either by the government getting its act together or investors demanding too high a premium.

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  1. Does the Federal reserve Bank count as “us”?

  2. When I see something like this:

    US dips into pension funds as debt limit hit

    I wonder WTF the whole “debt limit” theatre means.

    Can somebody explain to me how taking money from pension funds is any different than borrowing? (In a real-world, not ‘fake government accounting’, sense.)

    1. Bad link:

      http://www.msnbc.msn.com/id/43…..d_economy/

      (I can’t seem to make html links work on this board.)

      Trying again US dips into pension funds as debt limit hit

    2. In the same way that taking from the Social Security “Trust Fund” is different from borrowing.

  3. No, no, no. This must be wrong.

    I have been assured that China holds 100% of the debt, not 7.5%.

  4. China holds 100% of the debt

    Exactly. And, any day now, they will be at the door to twirl their Fu Manchus and evict us. Oh, how could we have fallen so helplessly into their dastardly plot?

  5. Can someone explain to me what in the fuck the reason for having a debt ceiling is if we just raise it every damn time we reach it?

    Might as well not fucking have one; congress already apparently treats it as if it doesn’t exist.

    1. Theory has it the debt ceiling makes the market in treasuries more liquid. Perhaps congress can do away with it by passing a law that says the debt ceiling limit is a fixed percentage of the last 5 years budgets? But alas, Democrats and Republicans like the debt ceiling issue because of the theater it creates.

    2. Love it you logic put a smile on my face.

  6. So if I’m reading this right, the government owes itself 26% of the debt.

    There are multiple layers of bogosity built into that.

    1. It’s more like a third, but the bogosity part is true.

      It goes up to about 40% if you count the Federal Reserve as being part of the government, which it really isn’t, but the boundary between the two has been so blurred in the last few years it may as well be.

      1. I’m wondering how much of that U.S. individuals and institutions portion of the pie is the Fed. More importantly, I wonder what the Fed’s share of that portion of the pie has done in the last three years.

        Bernanke’s job description reads: “making it rain it on Timmay”

    2. Yeah, that big slice of the pie for the Civil Service Retirement fund kind of puts the lie to the federal unions claiming their benefits are “fully funded”, doesn’t it? Fully funded with IOUs isn’t much different from unfunded.

  7. Can we please stop using “Social Security Trust Fund” or “Social Security Lock Box” as if they pointed to an actual account someplace with money in it?

    1. What would you prefer? SOCSEC Trustee Fun? SOCSEC Empty Box?

  8. People don’t realize how bad the scam it. In Financial Services, we are supposed to treat government bonds as the safest, most trustworthy investment there is.

    Thus, for people who are dependent on income from their investments, particularly ones who are too old to risk the ups and downs of equities, we are supposed to invest them in government paper.

    In fact, if we fail to, and we get sued, the lack of government paper can be construed as malpractice.

    And yet, when the government defaults (and I think it’s now a when, not an if), the elderly who have been funneled into loaning their nest egg to the likes of Barney Frank & John Boehner, are going to be lucky if they can afford dog-food.

    It would be one thing if the people getting fucked were plutocrats that plunder foreigners. But it’s going to be our neighbors.

    1. Very interesting moral point. From an ethical point of view I thought it makes the most sense to default on the debt: Someone’s getting screwed to the tune of $15+ trillion, so why screw over taxpayers whose greatest sin is not fleeing the country, when instead you could screw over lenders whose sin is consipiring with debtors to pass on debt to their children and other unwitting third parties?

      But if some of those lenders are actually legally prevented from choosing safer or more moral investments, picking the least unethical course of action becomes less clear.

    2. It would be funny if you got sued, post-default, for malpractice for steering them toward govt paper.

  9. Government loans bank a pile of money at 0% interest.

    That bank then buys treasuries at 2% interest.

    This is how Obama creates wealth….and like any house of cards it is doomed to fuck us over royally.

    1. GovernmentThe Federal Reserve prints and then loans bank a pile of money at 0% interest

      FTFY.

      1. The Fed is part of the government.

        1. I prefer to call it a QUANGO

    2. You left out:

      Banks are required to “strengthen their balance sheets” by avoiding “high-risk [business/personal] loans” and putting their new money into “high-quality assets” (read: Treasuries).

      Its a money-laundering scam. What new debt the Fed doesn’t buy/monetize directly, it buys/monetizes indirectly by laundering the money through the discount window.

  10. The gubermint will never default – it has much more nefarious methods for screwing the populace. It devalued gold in the depression, and immediately after the war inflation was about 50% destroying significant amounts of purchasing power.

    Gubermint loves credit – all that increase in GDP. Of course, credit is debt, and when that debt can’t be paid, all the malinvestment, poor allocation of resources, and chickens come home to roost. The fact that gubermint hides its default by inflation only compounds (pun intended) the bad effects.

    1. Banning gold “hoarding” won’t help the government this time around. It only made sense in 1933 because the dollar was tied to gold, so they couldn’t devalue the dollar if people were still free to exchange dollars for gold.

  11. Maybe we could get a loan from the IMF? Or at least a massage.

  12. the borrowing has got to stop. And it will, either by the government getting its act together or investors demanding too high a premium.

    Problem is, investors who are already invested in T-bills know that when that moment comes, they lose their shirts. So current investors have strong reasons not to demand too high of a premium.

  13. Just for the record, somebody should point out who owes the debt too.

    Individuals and institutions may only own 42.2% of the debt, but we owe 100% of the debt.

    And it’s the debit side of that equation I find so alarming.

    1. And this is exactly why big government really sucks, no matter how many people are stupid enough to think it’s a good deal.

      Some people think, “no big deal, we’ll just eventually default and then we don’t have to pay.” But that has major repercussions as well.

      1. I think they assume we can just keep borrowing indefinitely without any tangible consequences…to the economy, inflation, etc.

        As we were saying over the weekend, though, these are typically the same people who are convinced that if we don’t do something now, AGW will cook the planet.

        But the consequences of doing nothing about our debt crisis may be more destructive to our economy and way of life than doing nothing about AGW.

        Its’ just that one’s a fashionable cause and the other isn’t.

      2. “”Some people think, “no big deal, we’ll just eventually default and then we don’t have to pay.” But that has major repercussions as well.””

        Especially for those who have a part of the 42%.

  14. Just looking at this chart makes me want to yell “Hand check!” at the government. I doubt any of it’s left to feel comfortable about.

    http://www.intellectualtakeout…..-questions

  15. Hmmm, September 2010, what happened over the next 6 months from that date? Oh yeah, QE2, add another $600 billion for US holdings.

  16. Break it down by the ages and income levels of the debt holders and the future debt payers, and maybe our liberal friends will join us in wanting to reduce the debt ASAP.

  17. Debt Ceiling? I have no idea what that means.
    But maybe we should learn Chinese.

    and Newt Gingrich looks like the paint guy at Ace.

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