When the government owes itself $US1.6 trillion

[girl gone mad]

When the government owes itself $US1.6 trillion
By Bill Mitchell
http://bilbo.economicoutlook.net/blog/?p=15591

I did some research today on the outstanding US public debt – not because I think it is particularly important but because a journalist asked me yesterday during an interview – how much of the total US Treasury Debt is held by the US government – I said off the top of my head about 42 per cent which was a quick calculation based on work I did about 12 months ago and a rapid adding up off what I remembered from the monthly reports since then with a quick division thrown in. It turns out after I have updated the databases I keep that my “guesstimate” was not misleading (as at March 2011). The journalist then said – “so lets get this straight, the US government owes itself money equivalent to 42 per cent of its total outstanding liabilities?” Answer: yes. He then responded: “to fix the debt problem why wouldn’t they just write it off?”. Answer: I don’t see a US public debt problem. But because you do, then the answer is that for the most part they could just write it off as long as their were some additional legislative changes (for example, they would have to finance the operations of the US Federal Reserve in a different manner). So who owns the US debt?

There are a few data sets that you can pull together to break the total US public debt outstanding into various categories. The US Treasury Department provides an extensive (though awkward) data resource – for example, http://www.fms.treas.gov/bulletin/b2011_2ofs.doc">Ownership of Federal Securities. The US Treasury also provide data which provides a http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt">Foreign breakdown. The US Federal Reserve provides http://www.federalreserve.gov/releases/h41">Consolidated Balance Sheet data.

The following pie-chart is the result of some calculations as at March 2011. It shows the proportions of total US Public Debt held by various “interesting” categories. This chart tells you that the government sector held about 42 per cent of its own debt in March 2011 and the private sector held the rest (of-course).

The scare-mongering campaign that has been waged by the deficit terrorists in recent years holds out that US public debt holdings are dominated by the Chinese. If you call 8 per cent a domination then your sense of calibration is different to mine. The three largest foreign US debt holders at March 2011 are China (8 per cent); Japan (6.4 per cent) and Britain (2.3 per cent). The total foreign held share was equal to 31.4 per cent in March 2011.



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[Samantha]

1. The largest holder of U.S. debt is intragovernmental holdings

5.3 trillion dollars. I researched this very topic recently and discovered the main components of that is the Social Security Trust Fund, as well as the Medicare Trust Fund:

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x1675707

And that is exactly why I fear these programs are at risk -- they wish to write down the debt at the expense of the beneficiaries of these programs' expense. They just are not being open with the American citizens as to exactly why these programs must be cut. It is frightening, really.

Sam

[PoliticAverse]

5. Under his argument they could just "write off" the Social Security trust fund debt too...

http://www.youtube.com/watch?v=rCZRqH7sRyA

[DCKit]

6. What you said. In spades.

They've had SS in their sights since forever. Just how much of our debt could be wiped off the books with the SS trust?

With a pot of money that huge, you'd have to be a complete moron to not expect someone to be salivating at the prospect of stealing it.

[Samantha]

7. Exactly right, if they allowed Social Security to be privatized,

granted some Dems will protect this, but can't you hear the Republicans thinking if that happens the United States Government could write off 2.6 Trillion Dollars that it would not have to repay participants. That would be one incentive for allowing their cash cow to be cut loose. I am not sure how much is in the Medicare Trust Fund.

Just think, if the U.S. Government just allowed the Bush* tax cuts to expire, it could recover almost 4 Trillion Dollars in lost revenue. Yet, I am sure the Republicans would trade off Social Security and Medicare if it meant saving those tax cuts. Hey, they are beyond shame.

Sam

[Sherman A1]

2. Interesting

Thanks for posting.

[valerief]

3. So all the hullabaloo is a sham to shift the safety nets owed to the American people

to tax breaks for the wealthy.

[Samantha]

8. I am thinking some of the Republicans are thinking that

I am sure some Dems would stand up but just how many is anyone's guess. When we play our political charades ....

Sam

[PoliticAverse]

4. The Federal Reserve is owned by the US Government now ? n/t