About this debt.

[rug]

Who, exactly, is it owed to?

[MannyGoldstein]

1. $2.5 trillion of it is owed to the Social Security trust fund

Which is why Obama et al are trying to slash Social Security, so they can keep that money to fund tax cuts for the rich.

[hobbit709]

3. That's it.

If they don't pay it back, they won't have to pay it out.

[SpiralHawk]

2. Caviar Commission: Republicons squandered the money. They owe the debt

America's official Caviar Commission recommends that the debt be eliminated by making fatcat republicon cronies pay the massive steenkin financial disaster their so-called fiscal 'conserativism' (bwaaa ha ha ha ha) created, while Americans go on with their lives.

[melm00se]

4. the 15 largest US creditors

1 Federal Reserve and Intragovernmental Holdings*
2 Other Investors/Savings Bonds*
3 China
4 Japan
5 Mutual Funds*
6 Pension Funds*
7 State and Local Governments*
8 United Kingdom
9 Depository Institutions
10 Insurance Companies
11 Oil Exporting Nations (including H. Chavez)
12 Brazil
13 Caribbean Banking Centers
14 Hong Kong
15 Taiwan

*these translates, in many cases directly or indirectly, to American citizens holding the lion's share of the debt.

Source: http://www.cnbc.com/id/29880401/The_Biggest_Holders_of_US_Government_Debt?slide=1

This is a graphical representation of all the data:



it shows a break down of ~75% of the debt is owned domestically and the remainder internationally.

I rather hope that the economy turns around and has the necessary strength necessary to support the tax hikes necessary to pay off this debt when the notes/bonds come due.

[rug]

5. Thanks for the info.

[melm00se]

7. I love the irony that

Hugo Chavez and Venezuela are part owners of the #11 spot on the "who owns US debt?" list.

I guess his rhetoric and actions are at odds with each other.

:rofl: and :wow:

[melm00se]

6. the intersting thing

is that China bitches about the US debt and appears, periodically, to threaten us in an effort to get us to change our ways.

The thing that gets missed is that ~1/7 of the Chinese GNP is tied up in US bonds. if, as they have threatened in the past, they were to sell off their US bond holdings, certainly it would hurt. Don't forget, however, that they too would take a hit as they would be forced to sell those bonds at a discount. This would, in the short term, bolster their international currency reserves, it would, in the long term, begin to cost them money to do so.

As the Chinese sell off their bonds, they would have to do so at a discount (selling a $10,000 face value bond for, say, $8,000) and that discount would increase as the market becomes flooded with US debt bonds. This would be come especially acute if the USA responds with an increase in the interest rates that we are willing to pay for new bond sales (that $8K may become $7K or $6k...it all depends upon how much the spread between the interest rate on older bonds and the new bonds).

The debtor/creditor relationship, especially at this level, is an interdependent one. one cannot really make any kind of move without effecting the other. any aggressive/combative/punitive actions on the side of the creditor against the debtor activates a feedback loop that can negatively impact the creditor, especially if the debtor makes an interest rate (upwards) movement.

The big time concern is "when will inflation rates begin to go up?" which they will have to with all this additionally money hitting the economy with no corresponding increase in economic growth. Interest rates benefit the debtor but penalize the creditor (or the saver) so folks like retirees and retirement focused investors would be hurt as their investment growth will, more than likely, not keep pace with the inflation rates (unless they are invested in TIPs: Treasury inflation protected bonds). This will crush a growing number of citizens who have retired and are living on a fixed income (either SS alone or a combination of SS and private retirement savings).

edited for grammar

[Igel]

8. I assume you mean the debt owed to Social Security.

It is issued entirely by the US Treasury.

It is composed entirely of special issue bonds. If the bonds held in the Social Security "trust fund" were disowned (either by the SSA or by the Treasury--either way, it's "US government"), it would be disturbing but wouldn't affect any other class of US-government issued debt. They're not the same, and such a disowning would actually directly affect only the US government. There's a huge sea of US debt issued to non-US-government folk--whether China or my demented mother; that debt uses other instruments. Disowning SSA-owned debt might make other classes of US debt be seen as toxic. Or not. Probably not, I'm thinking, but what do I know, I'm a linguist.

The debt owed to the SS trust fund is debt. It is not a pot of cash waiting to be turned over to the SSA. The debt owed by Congress cannot be used by Congress to fund anything, whether a tax cut for the rich or the toothpicks used today in the Congressional dining room. It is debt. (Just try taking your mortgage or credit card statement to a store and saying, "See, I owe this much money--I'd like to spend it." It's an incoherent utterance.)

One would think that the SS administration could take its t-bills and sell them. After all, my father owned some T-bills for a while and could sell them. Except that the debt held by the SSA is special: The US Treasury can issue them only to the SSA, and the SSA can sell them only to the US Treasury. The debt is non-liquid.

The only way for the SSA to make that debt into something liquid, something they can pay out, is for the trillions of dollars in debt to be purchased by the US Treasury. This means money has to be transferred from general revenues, as allocated by Congress, to the SSA. That money can be from taxes or from the issuance of public debt instruments bought by places like China or by individuals. If it comes from taxes, it means a tax increase to be able to "save" Social Security by having the debt held by the SS trust fund bought out; another option is for Congress to reduce some spending, either in the general budget or by having the SSA not request having those special-issue bonds bought back by Treasury; a third option is for the Congress to authorize the issuance of public debt, i.e., increase the deficit. What isn't at issue is the need, under current projections and payment rates, for Congress to cough up a lot of money from general revenues to make the SSA's assets liquid.