Saturday, September 22, 2012
Who Is Buying US Treasuries?
China has been reducing its holdings of US debt, but Japan has been increasing its purchases. They both hold over $1 trillion of US debt because of their trade surpluses with the US. Overall 53% of US debt is held by international investors. The Fed has not been a big purchaser of US debt in recent months. It has stopped buying short-term debt, and it has invested in longer term debt at very low rates. That has the effect of keeping mortgage interest rates low. In total, the Fed holds around 20% of US debt. Domestic investors hold around 30% of the $10 trillion that is owed by the US Treasury. The $16 trillion amount that is frequently discussed in the media includes debt owed to government agencies. Most of that was borrowed from the Social Security trust fund which has been collecting more money in taxes than it pays out to retirees.