Who bought the $ 4.7 trillion in treasury securities added since March 2020 to the insanely high US national debt?


The Fed did. Almost everyone has done it. Even China has still nibbled. Here’s who owns this monstrous US $ 28.1 trillion national debt.

Through Wolf Richter for LOUP STREET.

The U.S. national debt has been in the making for decades, and then rose further when tax cuts took effect in 2018 during the good times. But as of March 2020, it became the incredibly high US national debt. Since that time 15 months ago, it has climbed by $ 4.7 trillion, to reach $ 14 trillion, or 128% of GDP in current dollars:

But who bought this new $ 4.7 trillion debt?

We can reconstruct this during the first quarter in terms of categories of holders: Foreign buyers according to the Treasury Capital International data, released this afternoon by the Treasury Department; the Fed’s purchases according to its weekly report; purchases by US banks based on Federal Reserve Board of Governors’ bank balance sheet data; and purchases by US government entities, such as US government pension funds, according to Treasury Department data on Treasury securities.

Foreign creditors of the United States.

Japan, the United States’ largest foreign creditor, gave up $ 18 billion in U.S. Treasuries in March, reducing its reserve to $ 1.24 trillion. Since March 2020, his holdings have fallen by $ 32 billion.

China had gradually reduced his holdings over the past few years, but at the end of last year he started increasing them again. In March, its holdings fell for the first time in months, by $ 4 billion, bringing its holdings to $ 1.1 trillion. As of March 2020, he has added $ 9 billion:

But the importance of Japan and China as creditors of the United States has diminished because the American debt has swelled. In March, their combined share (green line) fell to 8.3%, the lowest in many years:

All foreign holders combined abandoned $ 70 billion in treasury securities in March, bringing their holdings to $ 7,028 billion (blue line, left scale). But that was still up $ 79 billion from March 2020.

These foreign holders include foreign central banks, foreign government entities, and foreign private sector entities such as corporations, banks, bond funds, and individuals. Despite the increase in their holdings since March 2020, their share of the insanely large US national debt has fallen to 25.0%, the lowest since 2007 (red line, right scale):

After Japan & China, the 10 biggest foreign holders include tax havens where US corporations have letterbox entities where some of their treasury holdings are recorded. But Germany and Mexico, with which the United States has huge trade deficits, occupy 17th and 24th places. The percentages indicate the change from March 2020. Note the percentage increase in Indian holdings:

  1. United Kingdom (“City of London” financial center): 443 billion dollars, -5.6%
  2. Ireland: $ 309 billion, + 13.8%
  3. Luxembourg: $ 283 billion, + 14.8%
  4. Brazil: 255 billion dollars, -3.4%
  5. Switzerland: $ 255 billion; + 4.2%
  6. Belgium: $ 236 billion, + 14.4%
  7. Taiwan: $ 232 billion, + 12.9%
  8. Hong Kong: $ 227 billion, -11.3%
  9. Cayman Islands: $ 215 billion, + 2.8%
  10. India: $ 200 billion, + 27.8%.

US government funds hit a record high, but the share of total debt is still falling.

US government pension fund for federal civilian employees, pension fund for the US military, the United States Social Security Trust Fund, and other federal government funds bought net $ 5 billion in first-quarter treasury securities and $ 98 billion since March 2020, taking their holdings to a record $ 6.11 trillion (blue line, scale from the left).

But that increase was overtaken by the incredibly high U.S. national debt, and their share of total U.S. debt fell to 21.8 percent, the lowest since Dirt was young, and down from a 45 percent share. % in 2008 (red line, right scale):

The Federal Reserve goes wild: monetization of US debt.

The Fed bought $ 243 billion net of treasury securities in the first quarter and $ 2.44 trillion since it began financial market bailouts in March 2020. During this period until March 31 , it more than doubled its holdings of treasury bills to $ 4.94 trillion (blue line, left scale). It now holds a record 17.6% of the incredibly high US national debt (red line, right scale):

American banks are piling them up.

U.S. commercial banks bought net $ 28 billion in treasury securities in the first quarter and $ 267 billion since March 2020, bringing the total to a record $ 1.24 trillion, according to Federal Reserve data on bank balance sheets. They now hold 4.4% of the insanely high US national debt:

Other U.S. entities and individuals

So far, we’ve covered the net purchases of all registered holders overseas, the Fed, US government funds, and US banks. What is not taken into account: American individuals and institutions other than the Fed, banks and the government. These include bond funds, private sector, state and municipal pension funds, insurers, US corporations, hedge funds (they use treasury bills in complex leverage transactions) , private equity firms needing to park billions of “dry powder” and so on.

These American entities hold the remainder of the incredibly high US national debt. Their holdings jumped $ 149 billion in the fourth quarter and $ 2.35 trillion since March 2020, to a record $ 8.76 trillion (blue line, left scale). This brought their share of the total debt to 31.2% (red line, right scale), making these combined American individuals and institutions the largest holder of this monstrous mountain of debt:

The incredibly strong US national debt and who holds it, all in a monstrous pile:

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