Who Bought the $6.5 Trillion in Treasuries Piled on the Incredibly Spiking US Debt in 22 Months? Who

[corbe]

Who Bought the $6.5 Trillion in Treasuries Piled on the Incredibly Spiking US Debt in 22 Months? Who Holds the $30 Trillion?

by Wolf Richter • Feb 17, 2022

The question is particularly hot because Treasuries are now ugly instruments with the worst punishment yields ever.

In face of the incredibly spiking US gross national debt that just hit $30 trillion after having spiked by a mind-boggling $6.5 trillion since March 2020, the steamy-hot question is this: Who the heck is buying and holding all these Treasury securities?

The question is particularly hot because these are very unattractive instruments: Yields are still well below 1% for most short-term Treasury bills, and even the 10-year Treasury maturity yields only around 2%, while CPI inflation has blasted off and hit 7.5%, creating the worst punishment yields ever. To top it off, the most reckless Fed ever is still repressing interest rates and is still, though at a much slower pace, printing money.

The whole thing is a tragic clown-show, and yet every single one of the Treasury securities was bought and is held by some entity. Who are they? This is my quarterly update on who is holding this debt, and it’s an increasingly important question for increasingly iffy times.

Foreign Creditors of the US government.

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https://wolfstreet.com/2022/02/17/who-bought-the-6-5-trillion-piled-to-the-incredibly-spiking-us-national-debt-in-22-months-and-whos-holding-the-30-trillion/

[DB]

QE

The dept was just dollars added to the system backed by nothing.

[jmyrlefuller]

QE

The dept was just dollars added to the system backed by nothing.

That would be the least worrisome of the possibilities. Worrisome, still, but not as bad as having foreign bad actors with leverage over us.

[DB]

That would be the least worrisome of the possibilities. Worrisome, still, but not as bad as having foreign bad actors with leverage over us.

No. It is way worse.

Being able to create money out of thin air removes all tethers to economic reality. It is the only restraint that keeps a country from going the way of Venezuela. And we are well on our way.

[jmyrlefuller]

No. It is way worse.

Being able to create money out of thin air removes all tethers to economic reality. It is the only restraint that keeps a country from going the way of Venezuela. And we are well on our way.

The alternative is going the way of Crimea.

[DB]

The alternative is going the way of Crimea.

Not if you have a modern first world military.

[IsailedawayfromFR]

That would be the least worrisome of the possibilities. Worrisome, still, but not as bad as having foreign bad actors with leverage over us.

Can you explain how they have leverage over us since they are the ones who sent us assets in exchange for an IOU?

I believe that is backwards.

[DB]

Can you explain how they have leverage over us since they are the ones who sent us assets in exchange for an IOU?

I believe that is backwards.

Yep.

[Free Vulcan]

It's not the debt that will get us in the long run, it's the interest.

Even more immediate, the foreigners dump our bonds and refuse to buy them, among our other paper 'assets'.

[catfish1957]

Anybody buying UST's right now, at the present interest rate and par value, have basically been duped into the largest ponzi scheme in world history.

[catfish1957]

It's not the debt that will get us in the long run, it's the interest.

Even more immediate, the foreigners dump our bonds and refuse to buy them, among our other paper 'assets'.

Many, especially in Europe have been dealing with negative bond interest rates for some time now.  If they are buying our bonds they are really taking a risk, trading in their monetary positions that might have some better stability and basis, for our house of cards dollar.....   Just for a few percentage point gain.

I hope someone warned them.

[IsailedawayfromFR]

Many, especially in Europe have been dealing with negative bond interest rates for some time now.  If they are buying our bonds they are really taking a risk, trading in their monetary positions that might have some better stability and basis, for our house of cards dollar.....   Just for a few percentage point gain.

I hope someone warned them.

Exactly.  It is not the those buying the debt who have leverage.

It is the one selling the debt who has the leverage.  IOUs have little value.

[catfish1957]

Exactly.  It is not the those buying the debt who have leverage.

It is the one selling the debt who has the leverage.  IOUs have little value.

Very true.  A few years ago, I was on the fence 50/50 whether this thing would unravel as a '29 crash X10 or a Zimbawe, Weimar Republic inflationary spiral.

Now I am 35/65 toward the inflationary dystopian scenario. The house of cars falls, when the Fed reports that there has been a run on treasuries. Par values and interest rates dop together in historical tandem.    Bearers realize that their initial investment is worth somewhere between 10-25% of its iniital value.   At that point,   the U.S. government realizes it has no capital to operate.  Then it just gets uglier from there.

[massadvj]

The federal reserve and other entities controlled by the federal government has been the biggest buyer of treasuries over the past several years. In other words we are just printing money.

This ends badly.

[roamer_1]

Anybody buying UST's right now, at the present interest rate and par value, have basically been duped into the largest ponzi scheme in world history.

Unless the US is buying them with printed money... And who else can handle that weight?

[Hoodat]

This is the one who bought $6.5 trillion in Treasuries:

[jmyrlefuller]

Not if you have a modern first world military.

Tell me how that worked out in Vietnam and Afghanistan.

[jmyrlefuller]

Can you explain how they have leverage over us since they are the ones who sent us assets in exchange for an IOU?

I believe that is backwards.

They still technically own those assets. And until we pay them back, they own us.

[catfish1957]

They still technically own those assets. And until we pay them back, they own us.

Sovereign fidicuary does infer a stake of ownership.  Not a fact well known in this country.

[DB]

Tell me how that worked out in Vietnam and Afghanistan.

Seriously?

[corbe]

Tell me how that worked out in Vietnam and Afghanistan.

   @jmyrlefuller
   The Military didn't fail you in either of those aforementioned hellholes, it was the politicians, especially demonrats that tied our hands and kept us from achieving our objectives.

[IsailedawayfromFR]

They still technically own those assets. And until we pay them back, they own us.

We own what they paid us to start with.

They own nothing except what we choose to pay back.  What do you believe they can do about it anyway?

You act as if we will need to eat Chinese food if they tell us to

[DB]

What's that old saying:

If a man owes the bank a million dollars the bank owns him...

If a man owes the bank a hundred million dollars he owns the bank...

[Kamaji]

All the debtor's braggadocio on this thread is rather revolting.  Sounds more like a liberal modern monetary theory meeting.

[Hoodat]

It isn't that complicated.   All we have to do is to stop spending money we don't have, and use the money we do have to pay our bills.  This ain't rocket surgery.