Monday, March 9, 2009

Foreign Holders of US Government Debt

I've heard too many misquoted figures lately regarding how much US government debt China currently owns. I've also heard correct figures but without any context. Here are the figures from the end of 2008.

China is the largest foreign owner of US government debt however as a percentage of total outstanding debt, China's stake is relatively small, too small to have any significant effect on the US economy or interest rates.

For an up to date accounting of all foreign holders of US government debt, visit the Treasury's website: http://www.treas.gov/tic/mfh.txt and for a breakdown of the entire national debt visit: http://www.treasurydirect.gov/govt/reports/pd/mspd/mspd.htm
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4 comments:

  1. Chris MMarch 13, 2009 at 9:44 AM

    Would anyone be able to elaborate specifically on what the largest portion refers to (Intergovernmental Holdings)?

    I would like to find a clear answer as to what types of intergovernmental accounts does the federal government owe? Thanks!

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  2. Mike GumpperApril 24, 2009 at 6:55 AM

    Chris,
    I didn't get any notice of this comment otherwise I would have commented earlier. Intergovernmental holdings are Treasuries held in the Social Security trust fund and other government accounts where there is currently a surplus. Since more tax revenue is coming into the SS trust fund than what is being paid out to beneficiaries, the surplus cash is used by the government and Treasuries (think government IOUs) are put in its place.

    The Federal Reserve is also a major holder of government debt (more so recently in their attempts to add liquidity to the banking system). Any profit that the Fed would earn on their holdings of Treasuries is returned to the government.

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  3. AnonymousJuly 18, 2009 at 2:52 AM

    Intergovernmental Holdings are up to42% of total debt and the Government needs to triple the amount of debt it carries by september. How will this be possible.

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  4. Mike GumpperJanuary 28, 2010 at 12:05 PM

    Since 2000, intergovernmental holdings of debt has increased 49% and debt held by the public has increased 56%. The size of intergovernmental holdings gradually increases over time as population, the economy, and wages grow (more workers = additional FICA revenues from employees and employers, higher wages over time = greater FICA revenues, etc). Since this money is currently a surplus in the SS and Medicare Trust Funds, it is the first place government turns to borrow money (replace dollars with government debt).
    Sorry I didn't respond sooner. I've corrected the comments problem so that I now receive them via email too.

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