Who owns the US national debt? (An interesting pie chart)

[Taxloss]

I saw this on Metafilter. It's very interesting.



Image link fixed.

http://www.optimist123.com/optimist/2007/03/updated_pie_cha.html

[Robson]

1. The trend

The trend is your friend (as they say on Wall Street), except in this case it is quite unfriendly to the USA. Those percentages of foreign ownership are going up, not down. So is our national debt, and what's even more concerning is much of it is off the books as future obligations.

[Oilwellian]

22. It's my understanding....

the futures debt is in the trillions.

[GreenPartyVoter]

2. Those numbers are too big. My mind cannot comprehend them

[Taxloss]

4. To quote Dennis Healey (a British chancellor):

"A billion here, a billion there, and pretty soon you're talking serious money."

[Warpy]

12. Here's a way to think of them

An old plutocrat married the trophy wife of his dreams. There was a fly in the ointment, however, as she insisted that her mother move in with them.

Well, not wanting to ruin his newfound paradise, he decided to get his mother in law out of his hair by bestowing here with a gift: he would send her shopping all over the world with a thousand dollars a day.

For a million dollars, she'd be out of his hair for about three years.

For a billion dollars, she'd be gone for a thousand years, and that is the length of time from the third intermediate period of pyramid building in Egypt and now.

For a trillion dollars, she'd be gone for three million years, and that's the time between when the most primitive hominid apes were alive and today.

[The Doctor.]

30. Well illustrated. eom

[lumberjack_jeff]

3. The government doesn't own it's own debt, we do.

The Social Security Trust Fund is owned by us. The only distinction between the 2.7b and the $3b is the difference between individual ownership and collective ownership.

[fasttense]

5. Hmm, so does the US government buy its own Treasury-securities?

Is that the Social Security trust fund? The US government is the largest owner of the debt so I'm curious what that $3008 represents. It says it is the estimated breakout of Fed vs US Govt but I'm not clear what that means.

[Taxloss]

7. Me neither. I'm reading the referenced sources at the bottom right now.

I didn't make the chat, I just saw it and thought it was interesting.

[fasttense]

24. I found this post on your link which might explain the $3008 billion in debt the govt owns.

"Troy: The 3008B is an accounting entry; it is money owed by the government to itself. Whatever one wants to call the "economics" to make one's political point does not change the mechanics of the money stocks and flows.

The government incurs obligations in its own currency; some of those obligations are held by the public, some by the government itself. The latter will eventually be transformed into obligations held by the public, whether the bonds were originated by general fund "borrowing" from the trust funds, or vice-versa. Those bonds, which are backed by the government, will be redeemed with money, backed by the same government. The government's money will retain its value if and only if the real economy is large enough and vibrant enough to maintain the government's creditworthiness in the eyes of the users of money and the buyers of bonds, given the amount of money and bonds the government has chosen to issue.

How we tax ourselves, and how we supplement taxes with sales of Treasury securities, are political decisions. But how the money and bonds are created and how they flow are financial mechanics, not politics -- although the words one chooses to describe those mechanics ("voodoo" and "raid" for example) almost always depend on one's politics."

[WorldResident]

40. So the deficit's not really $8 trillion?

n/t

[Rosemary2205]

6. I wonder who owns the private the corporate debt? nt

[Taxloss]

8. That would also make a very interesting chart.

It leads to another question: who owns the banks?

And then we're in the territory explored right at the end of the film "Network" ...

[A HERETIC I AM]

10. Do you own any Mutual Funds?

If you own any "Blended" mutual funds or Bond Funds then YOU own part of the corporate debt.

Ever bought a CD? That is a debt security.

Many tens of millions of Americans own debt securities including, to some extent, most retirees.

You can buy a General Electric bond on Monday if you wanted or any other bond available from any other company that has issued them.

[peacetalksforall]

9. What the xxxx is going on with Israel? Why do we have to give them

money if they are lending it to us? Is that not money laundering?

The vigilantes can ask why Mexicans have to come here to earn money when their country is one of our debtors?

Why do we still give money away in the form of annual aid?

[Taxloss]

13. The foreign-owned portions of the debt are owned by foreign banks, companies and individuals.

Not just governments.

[peacetalksforall]

17. Let's trade - let their banks and investors the role of investing in whoever

our money is going to. The same for any of the creditors who are receiving our aid. It's time to rethink all of this.

[Taxloss]

31. Well, it's the choice of the foreigners who their money goes to.

They, like all investors, will be motivated by profit, not what deal is most efficient and logical for the USA.

[MadAsHellNewYorker]

14. We give money to almost everyone at that list. Like Taiwan, which owns 3x more debt

then Israel

[Robson]

36. $100+ Billion in direct aid to Israel, couldn't find any to Taiwan

We've given $100+ Billion in direct aid to Israel according to easily found websites.

I couldn't find where we've given foreign aid to Taiwan in recent years.

I can understand aid to third world countries, but not to any country that has a current account surpluss with the USA. That's analogous to a "Joe up to his ass in debt - spendthrift" giving money to his frugal and fiscally conservative brother in law.

I don't consider either Taiwan or Israel as third world countries.

[MadAsHellNewYorker]

37. if you want to find out about US aid to Taiwan,

I recommend David Tawei Lee's book, The Making of the Taiwan Relations Act for details into our military aid and ties to Taiwan. He clearly points out that aid is not "direct" anymore because of our need to appease China. I'm sorry that couldn't be found in a simple Google search.

And, that 100 billion in aid to Israel is since 1949; that money also comes from stipulations of peace treaties with Egypt and Jordan.

Im not a fan of foreign aid or military spending when there are Americans who desperatly need help.

[UTUSN]

11. K&R for I-don't-understand, hoping for an explanation

So, what about the Jerome CORSI-ites claiming there will be a North American union and that China will collect the debt with a keystroke?

[Taxloss]

15. I know. 4% surprised me as well. n/t

[A HERETIC I AM]

16. You have to ask the Jerome Corsi-ites how they expect ANYONE can collect on a bond by demanding

payment.

Answer?

They can't. No one - not a person, organization, individual or Government can demand principal repayment for a bond from it's issuer before maturity. Well, I suppose they could try, but they won't get far. A bond in which one can demand repayment of the principal amount before maturity is what is known as a "Put" provision and they are as rare as hens teeth.

If you can find a put-able bond....BUY THAT SUCKER!

Not one single cent of the debt of the United States Government originated because some Government official went to that foreign (or domestic) entity with hat in hand, asking for a loan. It doesn't work that way. They may have been asked to buy a bond, but they weren't asked for a loan. There is a difference and it is significant, not subtle.

[hfojvt]

21. can't a bond be sold to another lender?

And if they dump $40 billion worth of bonds on the market, doesn't that affect the market for current bonds that the Government is selling to meet its current obligations? But a huge sell-off would cause a big drop in prices and the seller would lose money. It would depend on how the rest of the market reacted. Would they swoop in on some bargains and buy, or would other people rush to sell before they lost even more money? From the looks of that chart though, another single buyer like the FED could easily buy up all of China's debt and 'correct' any blip in the market.

[A HERETIC I AM]

26. Yes, a bond can be sold on the open market

but there has to be a buyer or buyers and those buyers will want the same surety that the original purchaser was looking for when he bought them in the first place. (Guarantees of repayment of principal and regularity and reliability of interest payments)
Bond prices are most certainly affected by supply and demand. So a holder of an ultra large position in Treasuries that put them up for sale would more than likely lose money on the principal. In other words, he might only get $980 for a bond he paid $1000 for. Now the buyer has a bargain. He has just paid $980 for something that is going to pay him 4% (or whatever the coupon rate is) every year until it matures and then he gets the full $1000 face value back.

[NastyDiaper]

18. The lenders own it.

Because they ain't getting it back. Serves them right for making a bad loan imo.

[A HERETIC I AM]

20. I'm curious if it would surprise you to know that US Gov't bonds are seen as the most secure bonds

in the world.

Long term US Treasuries are seen by the worldwide investing community as the most secure and reliable bonds available.

You might ask why that is the case. (Of course, you might not ask and you might not care, but i am going to tell you anyway)

It is the case because Americans get up every morning, go to work and reliably pay taxes on their wages. Thats it.
The US government is seen as having virtually unlimited taxing power over the people of this country (which they do) and we pay those taxes and don't regularly burn down the capitol because of them.

The financial markets in this country are deep, liquid, well regulated, transparent and politically stable. There hasn't been a violent coup d etat for a very long time and there isn't likely to be one.

In a nutshell, THAT is why US treasury debt is purchased by foreigners and others. It is safe and pays a decent return.

[Gabi Hayes]

23. re: violent coups....

is forty three years considered "a long time?"

[A HERETIC I AM]

27. I assume you're referring to Kennedy's assasination....

and i was considering wording the sentence differently to allude to that.

In the larger scheme of things, it might be better to say "For the most part, shifts in political power in this country have occurred with little or no violence."

Agreed?

[JackRiddler]

32. What about 5 and a half years...

since the putsch? (The term is used according to dictionary definition.)

[NastyDiaper]

25. Ok let's keep borrowing until that changes.

What I am saying is that at some point, the lender becomes a party to the debt.

I'm not arguing, and I'm not an expert. And would be happy to learn more. My understanding of why japan's slice is so big, and the difficulty they would have cashing out, is simplstic.

But do we really have to be experts to know that our children will have less enthusiasm in repaying our debt than we have had in creating it?

[A HERETIC I AM]

28. Please, don't misunderstand my point of view. I think *'s policies have been a financial disaster

for this country. One of the major, long term effects the large deficits and increasing debt has is the essential lowering of our credit rating. If this country is seen to be unable to make interest payments on it's debt or even REMOTELY likely to default on any treasuries, it would be catastrophic for all of us.

Don't get me wrong - Too much debt is always a bad thing. I was just pointing out why OUR debt is so highly thought of.

Nasty - you and i aren't far apart here.

Peace:hi:

[NastyDiaper]

29. :) We can still turn this around simply by. Turning.

The decomposing bogs in siberia scare me a lot more than payments to China.
*'s War On the Treasury will end. Eventually.
Peace.

[Robson]

34. That's why Gore and Kerry didn't fight it

My supposition is Gore 2000 and Kerry 2004 and the Democratic Party decided that they would allow the Republicans to have the Presidential election rather than have a major showdown that could put a long term black cloud over the stability of the USA.

They fully understood the catastrophic impact that it would have on US debt, the stock market and our economy. The Democratic leadership knew that their time would come again, and it was better to rollover short term than to present the world with a less than 100% stable USA that would mean very serious negative and long term implications. I believe this also to be the reason that the 9-11 investigation still has many unanswered questions.

Obviously I don't know this to be fact, but that's the logic that those on high would use, as we only have two parties that share power like a see-saw. It's about money and preventing loss of it by the billionaires that control much of the policy in the USA.

[texpatriot2004]

19. K & R nm

[Robson]

35. question

what does K&R mean? I see it used here.

[A HERETIC I AM]

38. "Kicked & Recommended"

The kick part happens when you post to a thread it gets "Kicked" back to the top of the 1st page of the forum.

Recommended for placement on the "Greatest Threads" page.

[Robson]

39. Thanks

[JackRiddler]

33. The US government share...

would mostly be the Social Security share, as others have pointed out. The SS fund, in surplus for the entirety of its 75 year existence, has been used to finance the deficit, ostensibly on the assumption that this will be paid back into the fund.

(Yes, it's ironic that the federal government qualifies as bankrupt under the standards usually applied by the IMF, but that is never mentioned in the MSM, whereas the SS fund is considered in great danger because it will, unless trends change or minor reforms are implemented, go into deficit for the first time in about 30 years.)

This is the share of the debt that Bush, in probably his most important of all statements as president, called "just a bunch of IOUs." That's in reference to US T-Bills! (He was serving notice to the world: We decide and and when and what we pay. Tough. You can't trade in all your dollars anyway.)

Thus the government is in a position to default on 35 percent of its debt without pissing off anyone who matters (except the entire US population).