Category Archives: national debt

January 2022 Snapshot of Who Owns the U.S. National Debt

When Joe Biden was sworn in as President of the United States on 20 January 2021, the U.S. national debt stood at $27.76 trillion. One year later, the total public debt outstanding of the U.S. government has ballooned by nearly $2.11 trillion (or 7.6%) to $29.87 trillion.

Perhaps a better question to ask is to whom does the U.S. government borrow owe all the money it has borrowed?

The following chart illustrates who the U.S. government's biggest creditors are as of the end of President Biden's first year in office along with the portion of the national debt they are owed.

To Whom Does the U.S. Government Owe Money? 20 January 2022

The Overall Picture

The U.S. Federal Reserve is once again Uncle Sam's single largest creditor, accounting for 19.1% of the entire U.S. government's national debt. The Fed's share of the total public debt outstanding has grown from 16.5% a year earlier.

By contrast, the U.S. government's second largest creditor is Social Security, whose share of the ownership of the national debt dropped from 10.4% of the total to 9.2%. Social Security has been running in the red since 2009, forcing its Old Age and Survivors' Insurance Trust Fund to sell off U.S. treasuries it accumulated when it was operating in the black in order to keep paying out benefits at promised levels. Social Security's share of the U.S. national debt is projected to decline to 0% in 2034. After that happens, Social Security benefits will be reduced by somewhere between 20-25% as promised under current law.

The retirement trust funds for the U.S. government's military and civilian employees together account for 7.1% of the total U.S. national debt. After these large holdings, a diverse range of U.S. institutions, such as banks, insurance companies, independent corporations, investment firms and individuals combine to hold the largest share of money owed by the U.S. government, accounting for 38.6% of the total, down from the 40.4% share they held a year ago.

Foreign entities combine to account for holding 25.9% of the total debt liabilities issued by the U.S. government, up from the share of 25.4% they held on 20 January 2021. Of the portion of the national debt owed to foreign-based institutions, Japan now holds the greatest share at 4.5% of the U.S. national debt based on preliminary estimates, whose share is unchanged from a year earlier. China comes in second holding a share of 4.4%, which is down from 4.6% in 2021.

The international banking centers of Belgium, Ireland, and Luxembourg saw their share of the U.S. government's total public debt outstanding held steady at 3.0%, while the United Kingdom saw its share increase from 1.5% to 2.1% over the past year. Brazil and the remaining foreign nations saw their shares of the U.S. national debt dip.

President Biden's First Year in Office

As we noted, the national debt increased by $2.11 trillion in President Biden's first year in office. That amount was inflated by President Biden's American Rescue Plan Act, which we estimate accounts for $1.34 trillion or 63.5% of the increase by itself.

The following waterfall chart breaks down where most the money the U.S. government newly borrowed in President Biden's first year in office came from:

Net Changes in Holdings of U.S. National Debt, 20 January 2021 through 20 January 2022

We find the Federal Reserve loaned Uncle Sam 45% of all the net new borrowing. Foreign entities loaned the U.S. government the second largest amount at 33% of the net change, while U.S. individuals and institutions contributed the remaining 22%.

About the Data

These figures represent the most current information available as of 20 January 2022, which for the total public debt outstanding is fully current through 20 January 2022. The Federal Reserve's holdings is current through 19 January 2022, data on U.S. government entity holdings is current through December 2021, and data for foreign holdings is based on estimates through November 2021 that were published on 18 January 2022.

September 2021 Snapshot of Who Owns the U.S. National Debt

When Joe Biden was sworn in as President of the United States on 20 January 2021, the U.S. national debt had reached $27.8 trillion. Through the end of the U.S. government's fiscal year on 30 September 2021, the total public debt outstanding increased to $28.4 trillion.

The following chart identifies the entities who have loaned the most money to the U.S. government. The percentage shown for each indicates how big each entity's share of the U.S. national debt is as of 30 September 2021.

20 January 2021: To Whom Does the U.S. Government Owe Money?

The values for foreign nations shown on the chart represent a first estimate because the U.S. Treasury Department's data for the amount of U.S. government-issued debt held by foreign entities only reflects its estimates through August 2021. Data through September 2021 will become available next month, which will be subject to revision before being finalized sometime in 2022.

Once again, the U.S. Federal Reserve is Uncle Sam's largest single entity creditor, outranking its former top creditor, Social Security's Old Age and Survivors Insurance Trust Fund, by a widening margin. That margin is widening because Social Security is running in the red, which means it has to cash in its holdings of U.S. Treasuries to keep paying benefits to Social Security beneficiaries at promised levels.

But what is really remarkable is the extent to which the U.S. Federal Reserve is funding the U.S. government's spending above and beyond what it collects in taxes that has taken place during Joe Biden's tenure in office. Since 20 January 2021, the U.S. national debt has increased by $669.3 billion, but the U.S. Federal Reserve's holdings of U.S. government-issued debt securities has increased by $687.5 billion.

That's possible because the U.S. Federal Reserve has more than offset a net reduction of $520.4 billion in the amount of money other U.S. entities have loaned to the U.S. government during this time. At the same time, foreign entities have boosted the amount of money they've loaned to the U.S. government by $502.2 billion, which when combined with the other figures, accounts for the overall net change since 20 January 2021. Here's a visual rundown of the net national debt change math as presented using a waterfall chart:

20 January 2021: To Whom Does the U.S. Government Owe Money?

As of the end of the U.S. government's 2021 fiscal year, the Federal Reserve had loaned nearly one out of every five dollars the U.S. government owed through the end of September 2021.

About the Data

These figures represent the most current information available as of 30 September 2021, which for the total public debt outstanding and data on U.S. government entity holdings is current through that date. The Federal Reserve's holdings is fully current through 29 September 2021. Data for foreign holdings is based on estimates through August 2020 that were published on 18 October 2021.

January 2021 Snapshot of Who Owns the U.S. National Debt

As Joe Biden was sworn in as President of the United States on 20 January 2021, the U.S. national debt reached $27.6 trillion. To whom did the U.S. government owe all that money on that date?

The following chart reveals the major lenders who have fed the U.S. government's spending appetites up through President Biden's inauguration day and shows the estimated share of the U.S. government's total public debt outstanding owed to each.

20 January 2021: To Whom Does the U.S. Government Owe Money?

The U.S. Federal Reserve is Uncle Sam's largest single entity creditor, having overtaken the Social Security Old Age and Survivors Insurance Trust Fund operated by the U.S. government by a wide margin. The U.S. government owes one out of every six dollars of the U.S. national debt to the U.S.' central bank, which is overseen by an agency of the federal government.

Two other trust funds operated by the U.S. government account loaned a combined 7% of the U.S. national debt. The U.S. Civil Service Retirement Fund and the U.S. Military Retirement Fund have respectively lent 3.6% and 3.4% of the U.S. national debt to the federal government.

A diverse range of U.S. institutions, such as banks, insurance companies, independent corporations, investment firms and individuals combine to hold the largest share of money owed by the U.S. government, accounting for 40% of the total.

Foreign entities hold 25.4% of the total debt liabilities issued by the U.S. government. Of the portion of the national debt owed to foreign-based institutions, China (with Hong Kong) holds the greatest share at 4.9% of the U.S. national debt. Japan comes in second with 4.7%, followed by the international banking centers of Belgium, Ireland, and Luxembourg with a combined 3.0%. The United Kingdom holds 1.6%, while Brazil is owed 1.0% of the U.S. national debt. All the remaining nations of the world combine to hold 11.0%.

About the Data

These figures represent the most current information available as of 20 January 2021, which for the total public debt outstanding and the Federal Reserve's holdings is fully current through 20 January 2020, data on U.S. government entity holdings is current through December 2020, and data for foreign holdings is based on estimates through November 2020 that were published on 19 January 2020.

To Whom Does the U.S. Government Owe Money?

As of the end of its 2020 fiscal year on 30 September 2020, U.S. government's total public debt outstanding stood at $27,026,921,935,432.41 ($27.027 trillion). One year earlier, it stood at $22,622,684,674,364.43 ($22.623 trillion). During the year in between, the total U.S. national debt rose by $4.404 trillion.

Earlier this year, we found the U.S. Federal Reserve had become the U.S. government's new sugar daddy. As of 30 September 2020, we find that the Federal Reserve directly holds over $4.445 trillion in U.S. Treasury securities, up $2.338 trillion from the $2.108 trillion it held a year earlier. Uncle Sam's new friendly neighborhood loan shark lent 47% of all the dollars the government borrowed during its 2020 fiscal year.

As a result, the Fed's share of all the money borrowed by the U.S. government increased from 1 out of every 8 dollars the government has borrowed to 1 out of every 6 dollars. If we just focused on the publicly-held portion of the national debt, the Fed's share would increase to 1 out of every 5 dollars borrowed.

In becoming the U.S. government's primary creditor, the Fed has widened its margin over Uncle Sam's former top lender, Social Security's Old Age and Survivors Insurance Trust Fund, which has only loaned the U.S. government 1 out every 10 dollars it has borrowed.

The following chart tallies the shares of money the U.S. government has borrowed from its major worldwide creditors. Please click here to access the full size version of the chart.

FY 2020: To Whom Does the U.S. Government Owe Money? (Preliminary Estimate)

With the Fed having taken such a dominant lender role in financing the U.S. government's spending, the relative share of money borrowed from foreign entities has decreased. That share has fallen from 30% of the total public debt outstanding in 2019 to 26% in 2020. Japan has become the largest foreign creditor to the U.S. government, as China seeks to reduce its holdings of U.S. government-issued debt.

We had to wait until the U.S. Treasury Department issued its September 2020 monthly treasury statement some four days late on 16 October 2020 to get the latest debt holdings for Social Security and other trust funds operated by the U.S. government. The data for major foreign holders of U.S. government-issued debt is preliminary (or rather, only up-to-date through August 2020) and will be subject to revision over many months ahead.

Who’s Loaning Money to the U.S. Government?

ATM Closed for Coronavirus Recession - Source: Hello I'm Nik via Unsplash - https://unsplash.com/photos/QtTKfb23nBc

The U.S. government has gone on a borrowing binge since the global coronavirus pandemic reached the nation's shores and the number of known cases began increasing relentlessly at the end of February 2020, just over two months ago. From 26 February 2020 through 29 April 2020, the U.S. government's total public debt outstanding has increased by $1.427 trillion, from $23.427 trillion to $24.854 trillion.

That's a lot of money to borrow, and for all practical purposes, all of it was loaned to the U.S. government by its new Number One creditor, the U.S. Federal Reserve, to whom the U.S. government now owes more money than it does to its previous largest single creditor, Social Security. According to the Federal Reserve's H.4.1 statistical release for 29 April 2020, the Fed holds $3.945 trillion worth of U.S. Treasury securities, up from $2.465 trillion back on 26 February 2020, shortly before the number of known coronavirus cases in the U.S. began their rapid rise, which triggered the government actions that crashed the economy.

Our sharp eyed readers who do the math will catch that the Federal Reserve's holdings of U.S. government-issued debt securities increased by $1.480 trillion, more than the amount by which the federal government's total public debt outstanding increased over the same period of time.

How is that possible? Under current law, the Federal Reserve is prohibited from directly loaning money to the U.S. government, so it is actually acquiring debt securities that were originally issued by the U.S. Treasury when it borrowed money from banks and other financial institutions. The Federal Reserve can then pay them for their holdings of U.S. treasuries through its open market operations, much like how the lender you might have originally gotten your mortgage through might sell it to another financial institution. The money that was borrowed is still owed under the same terms as before, but now it's paid back to a different entity.

Doing that gives the original creditor more money to be able to go out and loan even more money to the U.S. government, which in the current environment, the Fed will then pay to acquire it from them. That process will repeat until the Fed decides it has had enough and tries to stop. Like it has before, which didn't really work out all that well for it.

In any case, that's how the Fed went from holding less than one in ten of all the dollars the U.S. government has borrowed to about one in six, making it the new single largest creditor to Uncle Sam.

April 2020 Rough Estimate: To Whom Does the U.S. Government Owe Money?

So to answer the question of how the Fed's holdings of U.S. treasuries is increasing faster than the rate at which the U.S. government is borrowing money, it's because the Fed's holdings are being tapped out of the larger pool of treasuries held by U.S. individuals and institutions, which is then quickly replenished.

We're calling this a rough estimate because not all the data in the chart is synced together. The data for the amount of debt held by the U.S. government's major foreign creditors is preliminary and is only current through February 2020, while data for Social Security and the civil and military retirement trust funds is from March 2020. It's as close as we can estimate with the data that's available.

How do you suppose the Fed will want to be paid back? And where do you suppose the U.S. government will get the cash to do that?

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