Who Bought the Gigantic $1.5 Trillion of New US Government Debt Issued over the Past 12 Months?

China, Japan, other foreign entities dumped US Treasuries. But someone had to buy. Here’s who.

Under the impact of a stupendous spending binge peppered with juicy tax cuts, the Treasury Department has had to issue a flood of Treasury securities to fund the cash outflow. So, over the past 12 months, the US gross national debt has ballooned by $1.5 trillion to $22 trillion as of January 30, according to Treasury Department data. And these are the good times when the economy is hopping. At the next recession, this is going to get cute.

But who the heck is buying all this debt? That question will grow increasingly important and worrisome as we move forward with this gigantic ballooning debt, fueled by deficits that Fed chairman Jerome Powell calls “unsustainable” at every chance he gets:

So, who bought all this debt?

US government debt, as expensive as it is in terms of interest payments for US taxpayers, is a mildly income-producing asset for the creditors of the US. Somebody has to buy it, every last dollar of it. The US relies on it. So, who bought this pile of debt that got issued in 12 months? China, Japan, other foreign investors? Nope. They’re gradually unloading this debt.

All foreign investors combined slashed their holdings of marketable Treasury securities in November by $105 billion from November a year earlier, to $6.2 trillion, according to the Treasury Department’s TIC data released today.

The Treasury Department divides these foreign investors into two categories: “Foreign official” holders (foreign central banks and government entities) cut their holdings by $144 billion over the 12 months, to $3.9 trillion at the end of November. But private-sector investors (foreign hedge funds, banks, individuals, etc.) increased their holdings by $52 billion, to $2.3 trillion.

The two largest foreign creditors of the US — China and Japan — have both been unloading their Treasury securities:

  • China’s holdings fell by $55 billion from a year earlier to $1.12 trillion.
  • Japan’s holdings fell by $47 billion from a year earlier to $1.04 trillion, having now reduced its stash by 16% since the peak at the end of 2014 ($1.24 trillion).

Though China and Japan remain the largest foreign creditors to the US, their relative importance has declined.

Over the 12 months through November 30, as China and Japan reduced their holdings by $103 billion combined, the US gross national debt soared by $1.26 trillion, to $21.8 trillion. So, China holds just 5.1% of US gross national debt (red line in the chart below), and Japan holds 4.7% (blue line). Their combined holdings (green line) has now dropped below 10% of the US gross national debt.

Other Big Foreign Creditors of the US

To round off the top 10 largest holders of US Treasuries, here are the remaining eight. Most of them are tax havens for foreign corporate and/or individual entities. Belgium is the location of Euroclear that holds about $32 trillion in assets in fiduciary accounts. The value in parenthesis denotes the holdings in November 2017.

  • Brazil: $311 billion ($265 billion)
  • Ireland: $279 billion ($324 billion)
  • UK (“City of London”): $264 billion ($226 billion)
  • Switzerland: $227 billion ($251 billion)
  • Luxembourg: $226 billion ($218 billion)
  • Cayman Islands: $208 billion ($240 billion).
  • Hong Kong: $189 billion ($195 billion)
  • Belgium: $173 billion ($115 billion)

With Foreign Creditors Net Sellers, Who’s Buying?

This may turn out to be an increasingly hot question as the US gross national debt keeps ballooning and constantly needs new buyers. Over the 12-month period through November 30, this debt rose by $1.26 trillion, to $21.9 trillion. These are the entities who were net buyers or net sellers:

Foreign holders (official and private-sector), net seller, shed $105 billion — to $6.2 trillion, or to 28.4% of total US debt.

Federal Reserve, net seller, shed $204 billion — to $2.25 trillion through November 30, or to 10.3% of the total US national debt.

US government entities (pension funds, Social Security, etc.), net buyers, increased holdings by $20 billion — to 5.87 trillion, or 26.9% of the total US national debt. This “debt held internally” is owed the beneficiaries of those funds.

And who holds the Rest? The only entities left:

American banks (very large holders), hedge funds, pension funds, mutual funds, and other institutions along with individual investors in their brokerage accounts or at their accounts with the US Treasury were huge net buyers, while nearly everyone else was selling, increasing their holdings by $1.36 trillion over the 12-month period. These American entities combined owned the remainder of the US gross national debt, $7.5 trillion, or 34.4% of the total!

When that appetite among American banks and other big institutions for US Treasury debt wanes, yields will rise because buyers will have to be lured into this market to absorb this flood of new securities on a weekly basis. But so far, so good – with the enormous appetite among American entities pushing down the 10-year Treasury yield today to 2.63%.

“Patient” is the Fed’s new favorite word. During the Q&A at the post-meeting press conference, reporters tried to get Fed Chairman Jerome Powell to nail down what “patient” actually means, how long “patient” would last. But they walked out empty-handed. Read… Fed’s QE Unwind to Continue on Autopilot, Rate Hikes on Hold for “Common-Sense Risk Management”: Powell

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  136 comments for “Who Bought the Gigantic $1.5 Trillion of New US Government Debt Issued over the Past 12 Months?

  1. brotherhorse says:

    yep, screwed.
    We know this, just bewildered it hasn’t crashed yet.

    • Rene says:

      Apparently, not enough risk has been transferred from the few to the many yet. The NWO banking mafia will push and squeeze it till they got the last drop squeezed, and as much risk transferred from themselves to us as they possibly can. We must realize that this is their endgame! Therefore I’m also curious whether they have progressed as far as they want to, with their plans to transition us all into a cashless and digital NWO currency system… I feel certain that they want this to be ready, once they crash us all. Their new currency system must be totalitarian, and therefore digital (crypto) for them to have full control over every human life.

      • Mike says:

        Amen. However, I would call them the banksters because they are the corrupt wealthy crooks who held and hold control over the banks and as an IMF economist said captured our government: both sides’ party candidates must get their support to gain power.

        Our country is like a speeding car whose drivers cannot apply the brakes or the car blow up. It is just a matter of time until there is some crash: pension funds for example are going to be taking as demand for treasuries dries up more. How much will treasuries that pay 5% be worth when new treasuries can only be issued at 12%?

        The losses are baked in now. Our people’s misery will be like the Russians when the communists fell. ALL Americans in the bottom 90% less wealthy people will suffer. I just hope that our political leaders (bankster’s puppets) will impose some imputed income tax or windfall profits tax on the crooks that drove our country to this economic disaster.

      • ZOMG!!! NWO!!! says:

        dial back the paranoia a bit …its so 2006…

    • joe loma says:

      don’t worry, it’s baked in already baked in, the US is taking the Japan route. money printing to buy back bonds and stocks will occur. Yellen said it publically. it will do for awhile but then we enter the 1970s. Start with stagflation and end with inflation and high interest rates. 8% to 10% bond yields anyone?

  2. Lenz says:

    Guilyy as charged: Bought a sizable amount of 1 year T bills back when it was 2.71%. At least that’s semi competitive. Now its dropping to ridiculous amounts again. How long till it flowers back up?

    When will Prince Powell sing his sad dove song?


    • Iamafan says:

      The 28 day investment yield at auction today noncompetitive wasn’t bad.

    • Nick says:

      Great business, first government printed trillions of dollars that went to banks, financial institutions and billioneres and now all these packed with money entities are buying gov. treasuries for these trillions

    • Wolf Richter says:


      The 1-year yield closed at 2.55% today. That’s not a big move from 2.71%. Just 16 basis points ($1.60 difference per year per $1,000 face value). It’s only a big deal if you trade these things in a highly leveraged way. But if you buy them to safely park some cash while beating CPI, the 16 basis point difference is no biggie in my book.

      • So is any of this bank buying the result of Fed mandated “reserves”? Treasury needs to sell, and you guys need to buy?

        • Wolf Richter says:

          Powell actually made an interesting side-remark about this during the press conference.

          I’m now citing off memory: He said that banks either deposit extra funds at the Fed as excess reserves (and get paid interest) or buy Treasury securities with them, and the Fed as bank regulator doesn’t care which way: both serve the same purpose: an asset without credit risk that shores up bank liquidity and makes banks safer.

          Which way banks go depends on which pays more interest: IOER or Treasury yield.

          IOER is now 2.4%, which is a tad lower than short-term Treasury yields, but these excess reserves are also a tad more liquid. So if yields rise, banks will switch more to Treasuries until the Fed raises its IOER.

          So for the Fed to maintain a larger balance of excess reserves on its balance sheet, it needs to offer competitive IOER. If not, these excess reserves will vanish (they’re already way down).

      • kam says:

        On a Macro basis net debt is $13.7 Trillion. To be carried by a $21Trillion, and growing, GDP.
        Lots of gas left in the tank. Keep choking the Panda, let American enterprise flourish.

    • ru92 says:

      I have some friends who have bought T Bills lately. They never before purchased any but their Financial Advisor had been telling them to move into bonds this year to protect their gains after a 9 year bull.

  3. Lemko says:

    Excellent Article!

  4. Citizen AllenM says:

    LoL, so true, but it is really funny how the investment demand is growing rapidly as the world economy slows.

    Our entire debt system is not working for the people, just for the richest of the world. What is funny is that the asset reset is slowly happening, but it will take a very long time. Assets priced dollars may actually fall, because QE is in reverse.

    Of course, everyone is still expecting inflation from all these dead dollars.

    Only will happen if we get significant wage increases in the entire economy.

    So, back to stagnant world.


  5. Old Codger says:

    And when the inflation hits, the Bond repayment will buy a Big Mac!

  6. BobT says:

    What is a mere $22 trillion between friends? It is almost as if the USA wants to see the end of the dollar’s status.

  7. Joe says:


    I am trying to visualize how this cycle works. Please tell me if I am getting this right. It seems like a snake swallowing its own tail.

    As the yield required increases then the amount taxpayers must pay increases.

    And as the amount the taxpayers must pony up then the impact is on the need to borrow more to offset what is required to meet the higher interest payments.

    As the shortfall amount needed to cover our costs increases due to higher interest payments the yield required goes up.

    1) Am I understanding that properly?
    2) How does that cycle end if there are no corrections to the current spending and/or revenue requirements?

    • Wolf Richter says:


      Yes, you got this right. Except you forgot to include the Fed and other central banks in this equation that have waged furious interest rate repression over the past decade (and even before, as in Japan). Japan is in much worse fiscal shape than the US, yet their 10-year yield is just barely above zero, unless it dips below zero. Why? Because the Bank of Japan owns more than half of all Japanese government bonds, and government-controlled institutions own another big chunk, and there is no bond market left, and therefore no market interest rate, and your whole theory falls apart…


      • Gandalf says:

        That makes Japan sound like a zombie country, kept afloat only by the frugality and high savings of its people, xenophobic resistance to importing anything it can produce itself, even at higher costs, and thus its perpetual positive trade balance.

        Japan’s become the poster child for a New Age economics idea called Modern Monetary Theory – Alexandria Ocasio-Cortez. (AOC) is apparently an adherent- which says that central banks can create as much money as needed out of thin air as long as the country controls its own currency and keeps inflation low. Huge Federal deficits are thus irrelevant

        The US isn’t Japan, but it does depend greatly on the dollar’s status as world reserve currency to fund those deficits. When that stops, so will the free money. We don’t have Japan’s frugal savings habits or trade surplus to fall back on

        • nick kelly says:

          Check driveways nearby. Japan’s favorable trade balance depends on more than aversion to imports.

          Driveways are just the easiest place for the consumer to view Japan’s industrial might, along with tools like Makita, Ryobi.

          It supplies industry with a huge variety of machinery, from copiers, optics, printing presses etc.

          You won’t see much Japanese or German stuff in Walmart.
          Apart from cars their exports are not for the consumer.

        • Gandalf says:

          The main area where Japan refuses to allow imports that would be cheaper than what it produces at home would be agricultural products – from rice to beef to apple to liquor, Japan’s home producers are protected from cheaper foreign imports by a labyrinthine system of tariffs and import regulations that jack up the cost of any item imported into Japan and keeps its less efficient producers at home in business. Japan has a consumption tax too on top of that.

          The key question I’ve been asking myself has been – why hasn’t the massive money printing in Japan and the US over the last two decades caused hyperinflation already, as happened in Weimar Germany, Zimbabwe, Venezuela, and the US in the 1970s?

          Inflation, and hyperinflation, fundamentally start when a country that needs to import certain key goods finds the cost of those goods has skyrocketed.

          Now, when a country highly dependent on those imports starts overprinting money, the value of its currency to its trading partners normally collapses, causing prices in its own currency to skyrocket, and setting off a general cycle of inflation/hyperinflation at home.

          That’s the Standard Model of Hyperinflation.

          It sort of happened to the US in the late 1970s. At the time the US had developed a heavy dependence on imported oil, which had a much larger role in its entire economy than it does today At the same time, the industries of Europe and Japan had recovered from the devastation of WWII and were ascendant.

          Wolf had a great article showing how the dollar started dropping as a world reserve currency during that time hitting a low if 40% by the mid 1980s

          The Oil Crises of the 1970s and the rising cost of oil were responsible for about 2/3 of the inflation that occurred, according to most economists. Wage inflation also occurred in response, as unions were still strong and many American workers were protected by COLA contracts that raised their wages automatically with inflation. The Federal government had not yet rigged its Consumer Price Index calculations to artificially lower inflation rates.

          In the 1980s, Reagan sweet talked the Saudis into turning the oil spigots back on and dropping oil prices (thus crashing the US oil industry for over a decade) – mostly by arming them to the hilt- selling them the best American weapons and building military bases, etc

          Changing the CPI formula, crushing unions with right to work laws, starting the wave of off shoring of manufacturing, increased automation, the development of fracking in the US oil industry – all these factors have kept wage and price inflation low in the US since the 1970s

          The US is hugely dependent on imports now and runs perpetual trade deficits. The great majority of US trading partners are either beholden to us for their military security (Taiwan, S Korea, Japan) or have shakier economies that hugely depend on selling their stuff to us (China, Mexico, and every Third or Second World country that we buy stuff from)

          They can’t afford to stop taking our overprinted dollars or charging us more because we’ll just go somewhere else cheaper and, because the dollar is the world reserve currency, some other poor country will take it. With the trade war going on against China and prices rising there, this is already happening, with manufacturers moving to Vietnam, Thailand, India, and elsewhere

          And so we are living high off our WWII legacy as the world reserve currency. Japan is avoiding hyperinflation by keeping imports low, consumption low, prices at home high, and savings high.

          It still all looks like a house of cards, a flimsy dam built to hold back a rising flood of debt, in bith countries

        • safe as milk says:

          this didn’t start with aoc. the japanese were following the advice of the smug genius aka paul krugman.

      • somoldguy says:

        Seriously WOLF, I just spent 1+ months touring all over Japan, and sure I met a lot of single guys who have decided to be ‘bachelors’ in the craft brew bars, but seriously all is GOOD, all is CLEAN, all is SWEET in Japan,
        On the other hand, when I travel in USA I just see sewage,
        I’m sure we can talk about how Japan has gone down, but people have re-adusted to the situation, I see many professional men with PHD’s deciding its better to just ‘live alone’, but I don’t see any deep seated suicidal un-happiness like I see in USA.

        Just saying,

        p.s. I was traveling with my asian-wife 1/2 my age, … all I ever saw anywhere I went was ‘thumbs-up’, when we travel in USA, all I see is disgust, … Surely the USA is the sewage pit of the earth both morally, and intellectually.

        • Wolf Richter says:


          Glad to hear that you had a chance to go to Japan! I love that place.

          There is a HUGE distinction between Japan’s fiscal mess and how the country and society operate. Some of the good things you see in Japan were and are causing this huge fiscal mess (enormous deficit spending and the largest public debts in the world in relation to the economy – more than twice the level of the US).

          I go to Japan all the time, and I agree with you about the trains etc., though I’m not a fan of the still existing open sewer canals (such as those in Soka, a suburb of Tokyo, where my in-laws live) that pump water from the river into the system and flush it back out into the river. They’re trying to get those modernized and install sewage treatment plants, etc., but it’s a slow process. My first contact with that open sewer system in Soka was in 1996, and it’s still there. I took photos of it when I visited in December. Here is the one I have to cross when I walk from my in-laws house to the train station:

          And there are a bunch of other things that you will run into in Japan that will make you scratch your head, including how the country has destroyed its entire coastline with tsunami fortifications that have turned out to be useless (see 11 March, 2011). But now nearly ALL coasts are ruined by ugly ferroconcrete structures. So next time, go to some distant coast and check them out.

          Then go check out the California coast!

          I wrote a book that is mostly about my experience in Japan in 1996… it’s a fun read.

          As most everyone here knows, I’m married to a Japanese woman. Mama-san is an artist. Here’s her site, designed and maintained by my wife:

          So, it’s hugely important to distinguish between what you see when you’re a tourist in Japan, and Japan’s fiscal situation which is not visible to tourists in Japan, except in the things that this deficit spend has bought.

      • Are you willing to consider the possibility that rates fell on their own? I am undecided, I believe the Fed should use rates to price risk, my mandate not theirs, and that they screwed up badly in 08′. Seems to me you cannot repress rates if there is enough demand for lenders.

      • yewtai says:

        U.S.-Japan Trade Facts

        U.S. goods and services trade with Japan totaled an estimated $283.6 billion in 2017. Exports were $114.0 billion; imports were $169.5 billion. The U.S. goods and services trade deficit with Japan was $55.5 billion in 2017.


        Japan have yearly trade surplus of $55 billion with US. Therefore Japan can print $110 billion or 11 trillion yen more, to keep yen low, and can prevent inflation.

        • Wolf Richter says:

          I agree with your basic theory that the trade surplus help Japan balance out some things. But it’s not that simple. According to the US Commerce Department, the US had a trade deficit of $69 billion with Japan in 2017 and had a trade deficit of $71 billion with Mexico. So can Mexico print even more money than Japan? Inflation was over 6% in Mexico for much of 2017 and now is still over 4%. And the Bank of Mexico has had to sell dollars in its foreign exchange reserves and buy pesos to prop up the peso. So trade alone isn’t the answer.


        • DV says:

          You need to look at bigger trade picture. On that basis Japan trade has been balanced, switching from surplus and then falling back into deficit depending on the price of commodities and energy in particular. After Fakusima with the need for energy imports Japan is not longer a big net exporter, but its exports to the US are even bigger as much goes through China or other South Asian exporting countries, to where Japanese corporations have off-shored up their manufacturing operations. It is probably 30 to 40 billion more just for China.

          The two things that keep Japan’s inflation low is that it produces everything domestically except for primary inputs and has huge Dollar holdings underpinning yen printing. The question is how long those will last now that Japan is no longer a net exporter.

    • Juanfo says:

      More like a snake choking on it’s own tail now.

  8. The United States is on the cusp. It is teetering, waving in the winds of change so to speak. It can be blown to the left (no, not that Left, just a metaphorical left) or to the right (ditto). You can bet based on these reported numbers that the cusp cannot support the behemoth for long. Given the insatiable demand of America’s politicians of all stripes for more free goodies for this-that-and-the-other-thing there is no question the perilous growth of debt will continue unabated. President Trump clearly is a big spender and one has to ask themselves if they ever heard him seriously talk about reducing deficits as he clearly believes the old Laffer Curve still works even with $24 trillion in debt.

    Zero Hedge today reports that some 63 of America’s 75 biggest cities suffer from staggering, unpayable debt levels not even including unfunded liabilities such as pension, health & sinking fund requirements. Thus the question arises what are the agencies, states & cities, the purported purchasers of US treasuries. What are the names? Name them. Point them out. Isolate them Show the financial world that the US Treasury debacle wavering on the cusp is actually possessed of the wherewithal to have made the purchases of claimed securities in the first place.

    No one is doing this exposing.

    The reason? It cannot be done.

    Then turn to financial centers like Luxembourg, Cayman Islands, Belgium, Hong Kong – all places of financial madness & mystery, sleuthing & skullduggery. Rogue Treasury, CIA or FBI agents easily can be setting up shell companies in all of these liquidity hot spots. Reminiscent of a Dan Duryea film noir, these highly-paid US sleuths and agents provocateur will gladly slink from one tax haven to another in pursuit of a guaranteed pension, intra-agency fame, promotion and high priced call girls paid for by US taxpayers.

    My bet?

    A huge percentage of the new US Treasury acquisitions is flimflam. A complete ghost. A debit on the window side and a credit on the wall – to those of use knowledgeable of accounting Arcanum.

    A parallel is found in politics. Comey didn’t think he’d be caught & Brennan didn’t either. The Clintons alleged trail of tears hasn’t caught up with them nor the handling of Mr. Trump and his alleged Russian hotel investors.

    The cusp is far worse than a slippery slope. It is a precipice a fall from which will make the Great Depression appear to be a growth spurt.

    • Chim Ritchalds says:

      Why do you think the US being in debt somehow disproves the Laffer Curve?

      • nick kelly says:

        The laughter curve has long since exhausted whatever merit it had.
        The spin- off or multiplier from a dollar of gov spending has declined from the originally claimed 6 dollars to less than 1.50.

        (It’s a cliche that the gov does not always get value for money but defense spending is especially suspect. )

        It’s not like this is a new movie or an experiment with an unknown outcome.
        When gov debt passes a certain point it has to be liquidated, either by simple repudiation or inflation.

        With hundreds if not thousands of crashed currencies lying in the ditch of history, why would the $US be immune?

    • Gold is just..gold says:

      Oh my goodness, Charles, what does one do? All seems lost!

      But ‘Gold is just..gold” ?

      • Anon1970 says:

        Some of the US Treasuries are being sold to state and local governments which use them refund their higher interest cost outstanding bonds into lower interest rate bonds. This class of Treasuries is known as SLUGS (State and Local Government Securities). The SLUGS remain outstanding until the first call date of the old bonds when they are redeemed by the US Treasury and the proceeds are used to pay off the old muni bond holders.

    • roddy6667 says:

      “guaranteed pension, intra-agency fame, promotion and high priced call girls paid for by US taxpayers”.
      My high school guidance counselor never told us about that option.
      I want a do-over.

    • timbers says:

      “Zero Hedge today reports that some 63 of America’s 75 biggest cities suffer from staggering, unpayable debt levels not even including unfunded liabilities such as pension, health & sinking fund requirements.”

      Don’t forget Illinois or Michigan. Do you think the Fed is talking about Illinois when it constantly repeats how awesome the economy is?

      As Darth Sidious the Evil Emperor in Star Wars said:

      “Everything is proceeding as I have foreseen…HEHEHEHE!”

      Even with the dubious source (ZH) which can be good but you gotta do some checking with them first (if you can stand the constant add popping not blowing up your internet connection when you go to that site – my computer once closed that site with the msg “this site is taking up too much data”).

      I get your point. Everything looks OK at the ethereal Fed universe, the top…because just look, the average Joe Smith Mark Zuckerburg is putting his average Joe Smith Mark Zuckerburg billions and trillions into treasuries so all is well we can borrow forever and ever!

      Except that I live in a non-averager Joe Smith Mark Zuckerburg town in USA and my property taxes go up 10%/yr, pensions of government workers and private workers are not being funded because there being diverted to Average Joe Smith Mark Zuckerburg types….as I’ve said….the Fed couldn’t care less if The Economy you and I live in (what’s that?) dissappeared today and declined 100% UNLESS Mr Market and Average Joe Smith Mark Zuckerburg types got upset about it.

      But if the stock portfolios of Average Joe Smith Mark Zuckerburg go down 10%…OMGOMGOMG! the Fed rushes in with instant help.

      The Fed, Mr Market, Average Joe Smith Mark Zuckerburg – they all could not give one itsy bitsy care in the world about The Economy you and I live in. It’s all about them and their Average Joe Smith Mark Zuckerburg economy.

      • Anon1970 says:

        Timbers: If you saw the PBS Frontline special on Dayton, Ohio in 2018, you’d know that everything is not OK in the USA. Like many other cities in the US, it is struggling. In many respects, the US these days reminds me of France just before the French revolution. The US keeps spending money it doesn’t have on a bloated military. French intervention during the American Revolution was good for the Americans but not good for the French treasury and certainly not good for King Louis XVI and his Austrian born Queen.

        • RD Blakeslee says:

          Ironic 18th century France would come up in these days of the Yellow Vests. There’s nothing new under the sun …

    • sierra7 says:

      Charles B.:
      Name of the Dan Duryea movie???? Went to his site on Google but couldn’t “single” out the right one….Thx.

  9. Gershon says:

    Who in their right mind is “investing” in US Government monetized debt that is going to be printed away by the Fed?

    • Iamafan says:

      OK so where do you think we should invest?

      • lordkoos says:

        Gold… not much of an investment but it’s safer than most.

      • Anonymous says:

        REIT’s. Not mortgage REIT’s, but equity REIT’s that own actual income producing brick and mortar property.

        • Robert Miller says:

          Why? Surely when tshtf those REITS that hold commercial property will be hit with empty properties and thus reduced profits? Move to cash and Wait for the wheels to fall THEN buy undervalued stocks. No?

  10. Gorbachev says:

    Who is buying this debt -we are.We have to.

    Boomers have cash and it needs to work and last

    along time. With real estate risky and stocks elevated what

    to do, what to do. The fed is doing those with cash a

    favor by reducing it’s balance sheet.With a major buyer

    on vacation rates gata go up.

    • RD Blakeslee says:

      “… cash … needs to work and last a long time.”

      “Needs” don’t necessarily “work” out. Fiat cash per se may fail … that’s what the so-called “gold bugs” think presently.

      Historically, Each of the world’s reserve currencies has failed in turn.

      There is nothing but hubris to justify thinking the U.S. dollar can survive eternally, IMO.

      • sierra7 says:

        As long as the US has a strong military to back up it’s coercive foreign policies and the dollar “diplomacy” (read: US view of the democratic process) we will remain top dog; but, that position is being slowly eroded by the disillusionment of both many US citizens and foreign friends, let alone “enemies”.

  11. Iamafan says:

    The primary dealers 1/16/2019 T Bill inventory was a very low 2.656 billion. The last scare was a good selling opportunity to dump the short end.

  12. Citizen AllenM says:

    Social Security has $2.8 trillion locked away.
    The Fed has more than a 1.1 Trillion permanently locked away for outstanding currency, lol.

    In other words, so much debt is not going to ever significantly play a role in any crisis.

    And the Fed could technically monetize it all, but then what would happen if they did?

    The US GovBond is now the foundation of the international finance system, and any destabilization would kill international finance and trade.

    So, until something better comes along, meh.

    And so far it hasn’t even come close.

    Even Russia is admittedly propping up some precious metal prices by being a huge buyer.

    As for social security going broke, as little as at 1% matched increase in OASDI base rates will push breakeven out to the 2050s, at which point I will no longer care. Raising income tax rates by 4-7% would solve the federal deficit, along with raising gas taxes.

    So I find the entire levels of panic about the dollar and treasuries to be seriously misunderstood.

    So much is assumed to be domestic and is actually foreign holdings of foreign banks, and so much is buried in long term investments, etc.

    Worry about an asset collapse in America, due to crappy domestic savings rates and dropping foreign direct investment.

    But hey, big numbers are scary, and the deficit is the biggest number of all, ever, and look at those interest rates- through the roof!!!

    LoL- near zero domestic inflation, and if we get real socialized healthcare, that will whack the crap out of medical inflation, then whomp…..

    But hey, after all, young folks are going to buy your overpriced house with their magnificent earnings at Starbuxs…lol.

    • Nicko2 says:

      Thank’s for a reasoned response.

      Yea, growth is slowing, but we’re not talking end of the world. Emerging economies are still growing 5-6% a year. USA still cleanest dirty shirt ect… Diversify.

      • Cynic says:

        We should try not to forget that all ‘growth’ of an industrialised system creates irreversible environmental degradation, and pollution we don’t know what to do with, but which will, in its accumulated effects, do us in.

        So, yes, it is the path to the end of a viable world, and we are clearly far advanced along it.

    • nearlynapping says:

      There seems to me to be a flaw in suggesting that the U.S. can muddle along until “something better comes along” to replace the dollar. I suspect the reverse. The dollar crisis will happen first and then something better will be the result.

      • RD Blakeslee says:

        Microeconomic peon’s hope: In the interim between the crisis and something better, a junk silver dime will buy a loaf of bread…

        • nearlynapping says:

          I am lost. A junk silver dime’s value is pretty much the same as the price of a loaf of bread today, and it will probably remain so in the future. However, no post 1964 dime has the value of a loaf of bread. But not sure what any of that has to do with how the coming debt and dollar crisis plays out.

    • Bankers says:

      Like Nick pointed out above, it is not that the debt cannot be managed, although in today’s world clearly the boundaries of that are being tested globally.

      No, the point is that it is being managed.

      FDI trends and domestic savings rates and low wages and a communistic MMT reaction are all fruit of that management, and that management starts with the fed method of fiat, namely the form of its balance sheet, which is : Government debt and guarantee.

      You cannot separate the rise in national debt from the rest that you observe, and it is this that the numbers are speaking.

      That purchases are now “household” not foreign only signifies that management of the USA is turning more inhouse – that does not nescessarily signify better.

      If there was actually some clear political economic goal in sight, and the method being used open and debatable, we might have an idea of what this all adds up to.

      That is not the case, not in the US and not in many other countries.

      And so we must live perpetually on edge and dependent.

    • nick kelly says:

      ‘The Social Security system is primarily a pay-as-you-go system, meaning that payments to current retirees come from current payments into the system.’ Wiki

      The ‘locked away’ i.e committed, is the amount that SS will pay out in 2019.
      The consumer lives paycheck to paycheck. So does SS.

      The latest estimate is that by 2034 current payments won’t be enough and SS will have to be cut or contributions rise.

      This sounds comfortably in the future but if the spiraling US deficit and debt is any guide, the future could get here faster.

    • Robert Miller says:

      Sure, it could go on for a long while until there is some trigger that nobody sees coming. Think banking failures of 2008 X 10 and a rush for the exits. Now it gets really interesting!

  13. Michael Gorback says:

    The growing chorus of Bernie Sanders, Elizabeth Warren, AOC, et al, will lead to the adoption of MMT economics. This will be very appealing to Millennials. It also dodges pushback from the plutocracy against “tax the rich” since MMT is not a socialist redistribution plan.

    “Win-win”? Politically, yes. Economically I doubt it. Recall that with Magic Money Tree theory the only constraint to printing money is inflation. Printing and spending is easy. Putting the toothpaste back in the tube to control inflation? Not so easy. What spending are you going to cut?

    MMT produces inflation not in assets but the private economy. Ergo, if your bond portfolio has long duration you are going to get hosed by private sector inflation. So are pension plans.

    What really huge holder of US debt is trying to shorten the duration of their bond portfolio and is it coincidence or foresight?

    • roger lagerfeldt says:

      you can push out tothpaste and in again. Just take a little bit and then back in again. Try it.

      • yngso says:

        After toothpaste is used it goes into the sewage system. Try retreiving it from there. Also try retreiving money gone out into the economy.

    • Kent says:

      The US already has a completely MMT financial system (which is why deficits never seem to lead to higer interest rates or taxes). But instead of using money to improve infrastructure and fight global warming, we use it to cut taxes and fight wars. MMT doesn’t beat the will of the voters.

      • IdahoPotato says:

        Spot on.

      • yngso says:

        The party system in any country only give voters very limited prefab choices. MMT completely ignores the effects of how money is spent and invested and the cost of debt.

    • Morty Mc Mort says:

      Think Carefully: The MMT pushers, are part of intergenerational warfare.
      The Boomers, with Retirement Savings, Expensive Houses etc, need to be “milked” – That wealth has to move from one generation to the next. The socialist, tax and spend generation, thinks they have nothing to lose, and everything to gain. It can all be done under the umbrella of “Morally” right actions, It makes sense- “You have nothing to lose, but your Starbucks Job”

      • Bankers says:

        Wealth used to be a private term, and transfer between generations a personal question. Government taxation was a transparent due on private wealth, ultimately highly visible. Though currency debasement has been tried for millenia, as part of administrative expansion, it has never achieved the overarching reach into economic activity and people’s lives as today. It is observable that the current evolution was initiated in the early 1900s in the US and UK.

        The political process of a welfare state in the UK and the eventual economic management of the country by high finance merged with government, took a slightly different route than the US, in part due to the dominant post conflict global position the US achieved. This allowed the US to boom and evade some of the social pressures that were present in Europe. That position is being slowly lost by the US as other countries catch up to its level of organisation, all demanding their share of global resources. Recent US adventures are aimed at maintaining its dominant position, it is not clear this is possible.

        We now have the US and UK populations mostly synchronised in generational wealth position . The transfer to boomer was via the new globalist enterprise starting maybe the 70s. The transfer to service economy and outsourcing of production combined with MMT induced monetisation of domestic assets (a combination of real assets, equities, government debt ) , saw the transfer of wealth achieved to boomers, in the UK in a slightly more socialistic style than the US though.

        Because the nature of modern fiat is communistic, that is to that its meaning and value are greatly derrived from an imposed system common to all participants, the question of wealth transfer to following generations is now a sore point. Not only have boomers been propped up by this system, which they have been sold as entitlement based on past promise, but their position of wealth has become dependent on occupying a higher part of a pyramid of wealth that is fully reliant on centralised attribution and management. So to maintain that tension we have the likes of student debt and monetisation of overinflated assets.

        The following generation however do not have a new positive global paradigm to work with, they do not have a post conflict expanding economy either. They have the tail end of those, high asset prices, heavy management of society, high national debt, a dispersed domestic enterprise that is competing with foreign labour, where local labour is in overabundance compared to its traditional value regarding real world expenses. Hence there is a gap in the transfer of wealth, a gap in generational understanding, and an inclination to monetise that gap socially via MMT. Currently there is a super surplus of highly consumable production ( whether food, gizmos) that takes the edge off the imbalances, but that is neither a solution to the heavy basic framework of wealth distribution. You may have a new generation called spoilt for choice with options piled on, but from their position they cannot tell the wood from the trees such is the noise and lack of real definition in the world they are hoping or trying to plan their lives into. The option of simply accepting whatever path is offered becomes more likely when they do not see any other choices.

        In short, it is the difference between being told “here is all of this for you” and actually being introduced to the world around by those who should know what it is and what it means, and with a sense of what can be made of it, with a firmness of own place in it.

        You therefore have a generational antagonism playing out, the “milking” is being done on all sides. For votes, for wealth, for position, you see how divisive politics and money are. Given that much US wealth has originated from outside of its territory, and that that source is likely to diminish, I suppose it can only be hoped that the temptation of simply redistributing remaining wealth, and the associated temptation of dictating that redistribution, both of which may happen via softpower MMT use, are avoided. Rebuilding a country is not impossible at all, but first its state has to be honestly assessed and the general public must agree on the better way forward.

        No one wants to do the dishes, but once the plate spinners have made off with the ware, people will also have to learn again how to make their own.

        I guess the Greeks did know best what to do following a good meal.

    • Wisdom Seeker says:

      Re “MMT is not a socialist redistribution plan.”

      Wrong. You should read MMT carefully. Part of it tries to describe how the current system works, and gets some things right. But there’s a lot more to it. The part about “Jobs Guarantee” in particular is definitely socialism. The other part about decoupling taxes from spending, and then using spending for socialist redistribution goals, is only socialist if the socialists control the government. But they’re the ones pushing MMT right now.

      My big issue with MMT isn’t the socialism part but the government-redistribution part. Once people accept the idea that the government should just run huge deficits, some kind of redistribution is inevitable because those deficits ARE monetary inflation and that is a hidden “wealth tax” on everyone not connected to the government spigot.

      The past 2 decades of deficits have amply demonstrated that government deficit spending mainly stimulates cronyism and grifting. China, Japan and Europe have done the same experiment with the same results.

      The natural endstate of the MMT philosophy is not a socialist paradise, but “from each according to his taxes, to each according to crony government spending”.

      • IdahoPotato says:

        “The part about “Jobs Guarantee” in particular is definitely socialism. The other part about decoupling taxes from spending, and then using spending for socialist redistribution goals, is only socialist if the socialists control the government. But they’re the ones pushing MMT right now.

        We do have corporate socialism right now. It’s called “corporate profit guarantee”. Boeing has an effective tax rate of -2.5%.

  14. roger lagerfeldt says:

    I think it is highly wiseble to buy physical silver/gold and preferable silver bec. it is cheap historical to gold and there are 5 times more gold than silver above ground. Silver will be needed in electric cars and all new houses in california by law.

    • jimmyrey says:

      …… And cruise missiles

    • IdahoPotato says:

      I have a better idea. Buy a place to stay in another country with lower costs of living and medical expenses (I have).

      Then move. If your net assets are less than $4 million, you don’t pay an exit tax if you want to renounce your citizenship. Else, keep your citizenship and move. But then you will pay taxes in both countries. But you will also get your Social Security benefits.

      • IdahoPotato says:

        To clarify, net assets of $2 mn for an individual or $4 mn for a couple invites exit taxes.

      • RD Blakeslee says:

        IMO, one does not have to move to a foreign country!

        In my personal experience (referenced here from another site so often Wolf had to can it), one can live quite well, quite (but, admittedly not completely) independent of the larger U.S. economy.

        • IdahoPotato says:

          @R.D> Blakeslee
          I do read that “other site” and enjoy your posts there. I gather that you get a government pension, you have admirable construction skills and bought acreage at a time when land prices weren’t through the roof.

          You grew up and worked in an era when people still made decent wages and could save.

          Not so anymore.

      • Iamafan says:


        Move where?

        The grass seems to be always greener on the other side. But really?

        • IdahoPotato says:

          Thailand? India? Costa Rica? Ecuador? Mexico? I happened to grow up in one of these countries so I am more familiar with things there.

        • nicko2 says:

          It’s a no brained to relocate to a ‘developing economy’ … IMHO, there are cheap but civilized places to live, ie. Malta, Cyprus, turkey, Morocco, Vietnam, montenegro … the trick is to plan carefully and not get hoodwinked by currency disparities- king dollar goes much further outside the USA than within it. Also, always keep a majority of assets in a separate safehaven (usa, offshore ect…).

    • SocalJim says:

      My opinion is to avoid gold and silver. Best bet for moderate inflation is will located real estate.

  15. fjcruiserdxb says:

    Question 1- are US pension funds required by law or through their mandates to hold a minimum of 10 years + treasuries in their portfolio.

    Question 2-if yes to Question 1- does it mean that most long bonds are snapped up by institutionals like in the UK therefore yields are compressed due to no real market in such securities.

  16. Martk says:

    “so far, so good” What ? Low interest rates good for who ?

    So everybody retired and all the pensions just starve and die with almost no interest income? (again now for another 5-10 years).

    Sorry Wolf I’m for the working man. Not Wall Street or the banks

  17. Marlin says:

    So, much of the debt is bought by pension funds, that are allowed to discount future liabilities with a rate of something like 7.5% a year?!
    Actually, it may be a smart move right now to buy treasuries, but I do think at some point the pension schemes need to assume a more realistic return on capital.

  18. kk says:

    ‘There is a lot of ruin in a great nation’, l can imagine the US debt doubling and it would still be bought cos all the alternatives are worse.

    • yngso says:

      I can see 2 problems with too much debt and investors buying it: High interest – yield – payments reducing the amount of money the govt can spend on worthy causes. Also, money which should be invested becomes unproductive buying debt.

    • Tom Jones says:


      You hit on it. Bought T-bills ’cause nothing else affordable, and they do pay SOME interest. As long as they pay a little more than Banks, ( which is next to nothing) Americans will buy them like there’s no tomorrow. Can’t afford RE, stocks rigged and over priced.

  19. nofreelunch says:

    Politicians can forgo the interest payments of 8% or so of the total budget, leaving them 92% to buy votes by “spending”. However when it reaches 20% like it did in the 1980’s, then it becomes too painful to lose that much vote buying ability, and only then will they make it an issue.

    • RD Blakeslee says:

      I ask again: In hindsight, does anyone fault then-Fed chairman Volker?

  20. SocalJim says:

    If the economy keeps growing at 3%, then this new debt can be absorbed. At this point, the big jobs number out today indicates even higher growth rates is in our future … perhaps 4%? Possible. So much regulation has been eliminated.

    The housing market slowdown is the result of a psychological issue created by all the negative housing stories printed in the second half of last year. The negativity suppressed the housing market. Same suppression happened in 2007/8 … this time it will not work. Tons of buyers are sitting in apartments waiting for the predicted price crash that will not occur. Soon, they will realize that fact, and a flood of buyers will hit the housing market at once. Watch prices jump later this year. This will be fun.

    • yngso says:

      “negative housing stories”, it’s about much more than that. Did you do the math regarding the 3% assumption, considerung the rising deficit costs?

  21. polistra says:

    Beautiful graphs as always.

    Brazil at #3 surprised me. It’s not famous as a tax shelter. Is this more like China’s use of our debt as a counterbalance to exports?

    • Wolf Richter says:

      It has been number 3 or near number 3 for quite a while. And I always tell myself to go check and find out why but somehow never get around to it. Someday I will. It is an interesting question.

  22. yngso says:

    I’m a new member of the Wolf family, and I’ve quite possible already made too much of myself, but I have a question: What about letting Disqus handle the comments? Then we’d get email notifications about new comments and replies. You’d lose some control, but I guess you could simply eliminate those who misbehave from the mailing list. I think you can also turn off the comments thread on YouTube. Others did.

    • Wolf Richter says:

      The answer is a resounding NO. Disqus is a third-party. It will take all the user data and all the comments that are now on my server and put it on its server, and it will monetize this data for its own purposes. I will lose control over commenting and over the intellectual property that these comments represent. No way.

      I specifically don’t want the email feature. I have the email feature but turned it off because it led to people endlessly arguing with each other — thus making the comment section unreadable for the thousands of readers that come here every day to enjoy it.

    • Maximus Minimus says:

      Ugh, I would be out of here. As is frequently said, but not enough: if you don’t pay for the product, you are the product, and I trust Wolf Street way more than some obscure company.

    • nicko2 says:

      Another vote for disqus…. It could encourage more commenting, on the other hand, spam bots could set up shop as well. Wolf has good modding skills, the personal touch! Perhaps we shouldn’t rock the boat too much. ;)

  23. Maximus Minimus says:

    Also important is the mix of maturities sold. That is determined by the treasury, but perhaps there is some research what will sell well.
    A good question to ask, if these supposedly well connected funds are buying treasuries, what does it signal?
    a. There is no better investment out there.
    b. There is no more safe investment out there (times ahead will be rocky).

  24. They’re going to get QE one way or the other, the rise in bond issuance doesn’t put upward pressure on yields, that lever doesn’t work any longer. Rates won’t go up until after the crash when supply and demand are once again in equilibrium.

  25. Kye Goodwin says:

    I’m sure that I don’t understand US Treasury debt. The last big use of quantitative easing by the Federal Reserve, now a few years in the past, spent something like 3 trillion dollars buying T-bills on the open market. I don’t know where the $3 trillion came from, but I’m SURE it didn’t come out of any annual budget of the US government. QE is monetary policy not fiscal policy, I read. Somehow these functions are apparently separable, and in the end, maybe after all the extra T-bills are rolled off the Fed’s balance sheet, that $3 trillion that was created out of nothing will have returned whence it came, so there’s no contradiction. Maybe someday I’ll understand all this well enough to explain it clearly in this forum. For now I’m sure I don’t understand, but I’m aware that there may be fundamentally different explanations to consider.

  26. safe as milk says:

    i find the steady increase of private treasury purchases by europeans via belgium to be telling. the eu has now lost they’re own bond market.

  27. ppp says:

    Enormous appetite? Don’t safe harbor rules, plus government pressure, account for U.S. institutions “voluntarily” buying U.S. debt? Aren’t you being naive about the pressure being applied here?

    • Wolf Richter says:

      I know tons of people who’re buying Treasuries because the yield is now above CPI even for short maturities. People and institutions buy them for derisking in a high-risk environment. There is no pressure by anyone to buy Treasuries.

      Banks can choose to put their money at the Fed as excess reserves (pays 2.4%) or buy Treasuries. Or they can lend out the money or buy something else.

      In an era of total interest rate repression and negative interest rates, 2.5% on an asset without credit risk is pretty good.

  28. secant says:

    At some point, the global financial system will need to do a debt jubilee, not just the USA. No idea when…5 years, 20 years, 50 years…someday. The math simply will not play out forever.

    The larger the financial debts grow, the more likely a long term solution will occur (a glass half full take on the current monetary insanity). My only real concern is when do I myself load up on debt, as my “FOMO” of a debt jubilee is real, thus timing is everything.

    Oswald Grubel, ex CEO of UBS and Credit Suisse, was asked his thought on what makes a man rich. He replied:

    “Rich is a man when he goes to bed in a carefree manner and wakes up without care.” He is then asked if, by that definition, a billionaire is rich to which he replied:

    “No. Money has little to do with wealth. The real rich are carefree. Those who are healthy, are not dependent. The greatest wealth is independence.”

    That was my motto since I was a kid, due mostly by having to loan my parent a substantial amount of money to keep them from going bankrupt when I was only 13 (had my first business at age 11). My biggest fear now is keeping my independence, and not having the world burn down, financially speaking, around me. Barring a global “reset”, I’m not sure anyone will be “free”, as sooner or later, the ever expanding grasshoppers will discovery the dwindling ants hiding in the weeds…

  29. Paul says:

    As long as the 10 year stays below 3.00% the markets are free to defy laws and history….program trading and institutional buyers keep the yield below the magical 3 level…and it is continued irrational exuberance

  30. Wendy says:

    Ok, let me get this straight. China, and japan are unloading, but Belgium, Ireland and the Caymans are loading up.

    Wouldn’t it be interesting to know who is actually buying through these havens?

    And wouldn’t it be interesting if the largest buyer was actually the Federal Reserve?

    Could this artificial propping up of the demand actually happen? I mean really, Caman Islands, my ass.

    • Citizen AllenM says:

      Last comment by me on this, because it is obvious the conspiracy folks can’t resist much.

      Look, own a Tbond, clip the coupon.

      But the more exotic hedgie crowd needs moar gearing, so this is what they do:

      Buy $10 million Tbond- okay, cost $10 million in up front money- then they loan it out to hedge bond buddies for 4.5% per year, and the buddy then sells it to the next sucker to use the funds to buy huge index bets or something, and throws 20% back as collateral- which is then used to buy another bond, etc.

      All good as long as the counterparties guess right and make a bundle- btw this is a huge amount of the hedge fund churn, how to gear up as cheaply as possible using available credit.

      This is also why the crisis in 2008 go so bad- so many fools made bad bets- with not enough equity to cover- guess what was in a lot of Bear Stearns little funds?

      So, if you can’t follow this simple daisy chain, don’t worry.

      Someday I just might explain a double dutch with an Irish filler, followed by a Mann flip.

      • Wendy says:

        As long as there is a greater fool bagholder it is all fine. Please explain the Double Dutch, Irish filler, Mann flip thing. I would like to learn about it. I would have guessed it was a porn movie scene, but clearly I need enlightenment.

        Is this this type of financial engineering why quite a few hedge funds have been underperforming lately? Are hedge funds like sharks swimming in a small tank where the overcrowding leads to one taking a chunk out of another causing a feeding frenzy?

    • Wolf Richter says:


      Remember, all foreign investors official and unofficial combined are unloading on net. Year-over-year, they dumped $105 billion. So what you’re addressing is how Treasuries get shuffled around between these foreign entities, some unloading, others loading up a little, with the net effect that, all combined, they’re unloading.

      BTW, concerning your point about Belgium: Back in 2014, Belgium loaded up and its balance soared to $380 billion (it’s now down to $173 billion). And Russia was beginning to unload… Russia now only holds $12 billion. I wrote about it at the time … kind of fun from historic point of view:

  31. John Taylor says:

    The big question I think is that of the “crowding-out” effect, something not talked about since the Reagan era:

    All of this domestic funding going to US treasuries is diverted from other investments (stocks, bonds & real estate).
    That puts a big headwind to the valuation of the other asset classes.

    Wolf – can you think of a good chart to show this affect – to show where this investment in US treasuries has been diverted from?

    • Remember what the candidate who won the election said ” Government is the number one creator of jobs, period..” The stock market is a national security interest, though it is propped up by foreign cash, a dollar, a bond, and a share of the S&P are pretty much the same thing. Global liquidity increases, that money is recycled into private investment through stocks, the debt gets monetized for more foreign adventures, and the NATO umbrella over Europe.

  32. Unamused says:

    US dollar hegemony may gradually be ending, and reserve currency status with it.


    Please make a note of it.

    The evolution of serious geopolitical issues are certain to dwarf the importance of US debt trends anyway.

  33. ArtV says:

    Wendy, many banks are still offering a pittance in yield to savings depositors. My small, rural, local bank is at .10%–one tenth of one percent!!! The differential between savings deposits and T bill rates was not such a big deal a couple of years ago when a 13 week bill paid less than 1%–.25 to .75% for much of 2013, 14 and15. But there is a huge difference now, with that small bank still only paying .10%, but with the thirteen wk. bill paying 2.45 annualized. So, I am one of those new buyers behind domestic demand here. And that is despite the fact that I am old enough to remember 7% in a money market sweep account at my broker’s. 2.45% is still a pittance compared to those days, but I am quite comfortable holding 13 wk. bills and being able to move money between accounts as quickly and easily as can be done these days.

    • SiliconValleySkeptic says:

      ArtV, I’m in the same t-bill buying boat. However in the back of my mind I’m constantly wondering, “what happens in a worst-case scenario?” It seems like the no-brainer option (with small tax savings and higher interest than most bank savings accounts) …

      Wolf, can you explain the bigger picture as regards T-bills if/when the economy starts to nosedive?

      • Wolf Richter says:


        With T-bills that you own, you’ll always get your money back plus interest. In that regard, there is nothing to worry about.

        If the Fed cuts rates during the next recession, the yield a new T-bill pays will go down. So any new T-bills you buy at that time will earn you less.

        But the Fed is not in rate-cutting mode. Not anywhere near. It’s pausing rate hikes in the first half, and it has already started very gingerly preparing the markets for one or two rate hikes in the second half. As you saw from the jobs report yesterday, there is no recession on the horizon just yet. GDP will grow, but at a slower rate than in 2018. We’ll get a recession eventually, but the signs are not lining up yet.

        • SiliconValleySkeptic says:

          Thanks for the response, Wolf. I guess the big fear in my mind is what happens if the U.S. finds itself in a position where it cannot pay back T-bill holders… Is that a scenario where the money-printing starts and (probably) hyper inflation?

        • Lemko says:

          You are a smart man Wolf and I respect your work… Read about The Jobs Report Overhype, quite scary the government would peddle fiction to this magnitude just to look good

          After both reviews come in for the Feb one, I am sure it will come back below 150, and the reviews will likely still have a little imagination left in them

          To say the Credit Market will not snap cause of a Monthly Job Report that has been heavily tampered since it’s inception is odd… Job’s report have been destroying expectations by 50 % across 2018, now by over 100 %! Watch the reviews of Jobs Growth in 2018 on BLS site, quittte different then what they originally come out and say, but the reviews don’t make the news do they ? Haha, only the initial grandiose number… Donny’s nose should of grew few inches while he was reading the ” report ”

          Would be a good topic for your site to do =)

        • Wolf Richter says:


          All this data gets revised as more data becomes available. The jobs data is based on two huge surveys, one that gets sent to households, and the other that gets sent to companies. I have been in both. When you get the piece of mail that says that you or your company has been selected randomly to participate in this survey, you HAVE to participate. These surveys are not voluntary. They’re mandatory to keep their statistical integrity intact. And they involve a huge number of respondents, not just the normal “1,000 Americans.”

          Revisions are clearly spelled out right at the top of the BLS press release. No secrets there. But it’s better not to get tangled up in the monthly fluctuations and revisions. Just look at the rolling 12-month total: 2.81 million jobs were added to the non-farm payrolls over the 12 months ended in January. That is in the upper third of the range of the past six years. 2.8 million jobs created in a year is pretty good job growth, any way you slice it.

          In an official “recession” — it gets called out by the NBER — the total number of jobs in the US shrinks, and the monthly numbers are negative. During the Great Recession, the number of jobs in the US plunged by the millions. It’s not hard to see a recession when you look at job growth/decline. A recession shows up in the numbers!

  34. John says:

    Makes no sense to describe the buyers of US debt as countries.

    In 2008 there was one (just one !) article in WSJ explaining this quid pro quo process.

    Say,Fed lowers Citibank reserve requirements in the US to 0.125% on the condition that Citibank located in Cayman Islands buys $250B in treasuries.

    I became interested and wanted to follow up but there was no follow up-neither in WSJ nor anywhere else.

    Maybe ignorance is bliss.Or,as the Bible says-

    “Because in much wisdom there is much grief, and increasing knowledge results in increasing pain.”

    Ecclesiastes 1:18

  35. Stuart Brown says:

    If the gross national debt chart was any other metric over time as examples, sales of a product, birth rate, improved safety of cars… anything… you would conclude the trajectory could not continue much longer.

    However, faith worldwide in the system is such that only a small ripple of concern is being expressed at this nonsensical debt scenario. Scary.

  36. Paul morphy says:

    I know that you have covered this subject before. And we know from previous Treasury publications, that the regions/nations buying American bonds get listed.

    My own country, Ireland, is usually listed as the third highest holder of American federal bonds. But just to be clear that in this context “Ireland” is not referring to the Irish state. “Ireland” instead refers to companies/entities registered or domiciled in the sovereign territory of Ireland.

    Located in Dublin, there is the Irish Financial Services Centre, which is highly likely to be the address for the companies/entities buying these bonds.

    There is no regulatory obligation on these companies/entities to declare their holdings except in the filing of their annual statutory returns to the Irish Companies Registration Office.

    I suspect that the purchasers of these bonds are subsidiaries of American corporates such as Google, Facebook, etc who have several entities registered with the Companies Registration Office.

    • Wolf Richter says:

      “I suspect that the purchasers of these bonds are subsidiaries of American corporates…”

      Yes, I have said this before too. We don’t get data by country divided by official and private-sector holders, so we don’t know. But th fact that the balance has gone down after companies started to repatriate their “overseas” cash indicates that this is the case.

      • Iamafan says:

        Regardless of which “country” bought it, the TOTAL foreign holdings compared YOY, fell by about $100 billion. Considering the Treasury auctioned more than $1T in 2018, you need to really wonder, who is buying more?

        If it is local US money, then is it right to ask if this is money coming out of other securities? Is that why there is so much talk about ending QT and rate hikes?

  37. Norma Lacy says:

    Wolf: First thank you thank you thank you for your excellent, insightful, informative website. I check in every day and especially appreciate the Fed/treasury information updates.

    Second: Don’t change a thing! Is my opinion. No bells and whistles needed. Many of your regular readers offer useful comments. It would be a shame to lose them due to privacy fears.

  38. Iamafan says:

    If you are retired and a “rentier” like me, you have to ask a basic question — where will you get the money to live? Income must come in regularly to survive. Today that is provided by my own IOER which gives me at least 2.4%. The Fed’s patience is not in my favor. Sorry. I want interest rates to normalize — meaning they get up to where they were before the crisis caused by banks and gambling. How’s this for honesty?

  39. Michael Gerner says:

    Wolf, why did you delete my post, I really believe that Victor Sperandeo’s details answers the question you raise about who is buying.

    Was there something wrong with the post?

    • Wolf Richter says:

      If you want to explain something, explain it here. Don’t just dump a link into a comment on this site to send readers to YouTube to promote a video.

  40. Aussie says:

    It is now clearly obvious whom is backstopping the US Federal Reserve, and that would be several World Banks who the fairy Munchin had to run to just a few weeks back. They have the Fed’s back! So you can now look forward to a strong rally in stocks, NIRP and the continued robbing of the middle-class until none remain. The .01% will continue to get richer at our expense!

  41. Iamafan says:

    Wolf, I have 2 questions that keep on bugging me. I hope you can answer them:

    1.) Can the banks just withdraw their excess reserves from the Fed and buy Treasuries?

    2.) Where do the primary dealers (banks) get the money to buy Treasuries? Do they just conjure the money out of thin air?

    Thanks for the answers. I gotta believe others have the same questions, too.

    • Wolf Richter says:


      1. Yes, electronically, without waiting period. And they have been doing it. All banks combined have withdrawn $1.1 trillion since the peak in 2014. A bank withdraws its excess reserves when it needs liquidity to do something else with, such as buying Treasuries with higher yields, or lending out more money.

      Some big banks are loaded up with deposits and they put this extra cash at the Fed as excess reserves. Other banks are starved for deposits, and they have no cash parked at the Fed as excess reserves (all they have at the Fed are the required reserves). So it’s bank by bank.

      2. Primary dealers don’t have to sit on the Treasuries they buy. They can sell them in the market and make a profit on the difference and in fees. For them, it’s a flow. They’re just a conduit. That’s their role. So primary dealer X might buy $300 million in 10-year notes at the auction and then spend the next two days or two weeks selling them in a 100 different portions. For them, it’s a trade, rather than an investment.

  42. c1ue says:

    I’d note that net foreign purchasing of US Treasuries is basically flat since 2012 – i.e. foreigners have, collectively as well as both private and central bank, not been buying Treasuries for 6+ years.

    August 2012: foreign central bank holdings of US Treasuries totaled $3.957B, all foreign holdings totaled $5.447B. US national debt was $15.5 trillion or so – meaning the foreigners held around 35%.

    December 2017: foreign central bank holdings of US Treasuries totaled $4.024B, all foreign holdings totaled $6.211B. US National Debt is $21.7 trillion – meaning the foreigners hold 28.6%.

    More importantly, of the $6.2 trillion new US national debt issued since August 2012, foreigners have purchased only $744 billion (12% of net debt issuance) and the central banks accounted for $67 billion of that, less than 10% of new purchases and 1.2% of overall debt issuance. The US debt profiles I’ve seen also seem to indicate that the overall duration of debt held is significantly shorter than in the past. This seems to indicate that any new purchases (rollover of existing holdings) is exchanging of long term debt for short term.

    Is this an indicator of a potential USD window closing?

    Nixon too the US off the gold standard in 1971 because gold was leaving the US too fast; does this effective boycott of US new debt issuance the fiat equivalent for the US dollar?

  43. c1ue says:

    FYI: Wordfence is not happy with the link to the historical Treasury data for some reason

    • Wolf Richter says:

      Strange. I just checked. It works fine for me. Another mystery in the great and endless series of internet mysteries.

      Thanks for pointing it out.

      Other readers: Did you also encounter that problem?

Comments are closed.