Who Bought the $1.3 Trillion in Debt the US Government Added to its $23-Trillion Pile in 12 Months?

Treasury securities are hot. The Fed backed up the truck. US banks & others bought too. But China dumped.

By Wolf Richter for WOLF STREET.

The US Gross National Debt spiked by $1.3 trillion over the past 12 months, to $23.3 trillion. These days, trillions fly by so fast it’s hard to see them. But these are the good times. And we don’t even want to know what this will look like during the next economic downturn:

And who the heck bought all this debt?

This debt exists in form of Treasury securities, and each of these securities was bought by some entity in the US or in some other country. These entities fall into five broad categories: Foreign holders; the Fed; the US government via government pension funds and the Social Security Trust Fund; US commercial banks; and other US institutions, companies, and individuals. So here we go…

1. Foreign Creditors.

In terms of foreign holders, the Treasury Department’s TIC data, released Tuesday afternoon, revealed how much of this debt was held, bought, or dumped by foreign investors through the end of December.

All foreign investors combined – “foreign official” holders such as central banks and foreign private-sector investors of all stripes – dumped $83 billion in US Treasury securities in the month of December. But for the whole year of 2019, their holdings rose by $425 billion to $6.70 trillion. In other words, foreign entities bought 35% of the additional debt the US sold in 2019 (in a moment, we’ll get to who bought the other 65%).

The share of foreign holdings fell to 28.9% from prior quarters but was nearly flat compared to a year earlier. The chart below shows the holdings at the end of each quarter, in trillion dollars (blue line, left scale) and as a percentage of total US debt (red line, right scale):

Japan shed $6 billion of its Treasury holdings in December. But for all of 2019, it added $113 billion, bringing its holdings to $1.16 trillion (the peak was in 2014 at $1.24 trillion).

China has been cutting its Treasury holdings every month since June. In December, it shed another $20 billion. Its total holdings are now down to $1.07 trillion, the lowest since peak-capital-flight in late 2016 and early 2017:

The relative importance of Japan and China as creditors to the US has been declining for years, as the US debt has ballooned and as other creditors have stepped up. The share of Japan’s and China’s combined holdings fell to 9.6% of the total US debt:

Most of the next 10 major holders are associated with tax havens and financial centers, including Belgium, home to Euroclear, which handles large amounts in fiduciary accounts.

Mexico, which had the second-largest goods trade surplus ($102 billion) with the US in 2019, and Germany, which had the fourth-largest goods trade surplus with the US, do not rank here. Mexico is in 24th place and Germany in 20th place. This disproves the theory that countries that run a big trade surplus with the US have to hold large amounts of US debt.

Here are the top 10 also-rans (in parenthesis, their Treasury holdings in December 2018):

  1. UK (“City of London” financial center): $333 billion ($288 billion)
  2. Brazil: $281 billion ($303 billion)
  3. Ireland: $282 billion ($279 billion)
  4. Luxembourg: $255 billion ($231 billion)
  5. Switzerland: $237 billion ($230 billion)
  6. Cayman Islands: $231 billion ($226 billion).
  7. Hong Kong: $223 billion ($196 billion)
  8. Belgium: $210 billion ($185 billion)
  9. Taiwan: $193 billion ($157 billion)
  10. Saudi Arabia: $180 billion ($172 billion)

If not foreign holders, who else is there? US holders…

2. The Federal Reserve

The Fed added $344 billion in Treasuries, including repurchase agreements, in 2019. After shedding Treasury securities through July as part of its QE unwind, it backed up the truck in mid-September and bought a vast pile of Treasury securities, including Treasury bills and via repurchase agreements, as part of its repo market bailout. And by the end of December, it had undone its QE unwind of Treasuries of the first six months of the year, plus it had added $344 billion, bringing its stash of Treasury securities (including those purchased via repos) to $2.54 trillion.

3. US government funds

US government entities bought $178 billion in Treasuries in 2019, bringing their total holdings to $6.03 trillion. These entities include the Social Security Trust Fund and government pension funds, and their Treasury securities (“debt held internally”) are assets that belong to the beneficiaries of those funds.

4. US Commercial Banks

US commercial banks bought $131 billion in Treasuries in 2019, which brought their total holdings to $924 billion, according to the Federal Reserve’s H.8 data release on bank balance sheets. This amounts to about 4% of the total US debt.

5. Other US entities

Other US entities bought the remaining $141 billion in Treasuries in 2019. These entities include US institutional investors (other than commercial banks), including bond funds, pensions funds, insurance companies, hedge funds, private equity firms, plus cash-rich companies such as Apple, and individuals directly or indirectly. And these purchases brought their total holdings to $7.0 trillion, or 30% of the total US debt, making them the largest holder of US debt.

The chart below shows the categories of holders of US Treasury securities, but with “US commercial banks” and “Other US entities” combined into the top category (yellow), holding a combined share of 34%:

My “Credit-Card Spread Index” blows out. Heck if I knew what that means, but it doesn’t mean anything good. Read…  Credit-Card Interest Rates Soar to Record High, Bond Yields Drop to Record Low: What Gives?

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  84 comments for “Who Bought the $1.3 Trillion in Debt the US Government Added to its $23-Trillion Pile in 12 Months?

  1. Iamafan says:

    The simple answer is the Fed did. For the 2nd qtr, watch the State and Local Gov’t buy Treasury Securities. Oh did I mention the Hedge Funds (especially those incorporated in shell countries)? It’s in the cards.

    • Harrold says:

      Wolf mentioned the Cayman Islands, they have a population of only 60,000.

      • Iamafan says:

        I use this: https://ticdata.treasury.gov/Publish/slt1d.txt
        every month to key in important data to my spreadsheet used for analysis.
        Cayman Islands, Luxembourg, Ireland, and some others are a joke. Belgium is almost a joke, too. The amount of US Long Term securities they hold is several times their GDP.
        But instead of merely measuring TREASURIES, one needs to see the bigger picture.
        For Europe, only 21-22% of their total holdings of US securities are in Government securities. About 79% are in CORPORATE stocks and bonds. If our markets take a hit, Europe gets more sick.

    • Wolf Richter says:


      No, the Fed did not do it. Please read the article, which will tell you who did it.

      For the year 2019, the QE unwind was going on through June, which means through June the Fed was shedding assets, so its purchases in late 2019 first had the effect of undoing the QE unwind of earlier in the year, bringing the Fed back to neutral for the year, and then the Fed added $344 billion on top of that… out of the $1.3 trillion in additional Treasuries issued in 2019. To find out who bought the remaining $1 trillion, read the article.

      • If Apple buys treasuries, isn’t that foreign ownership? Is the corporate tax cut (more treasuries on Apple’s balance sheet), a way to fund government spending? Monetize the deficit, by diverting revenue, and hoping economists believe the tax cuts were really stimulative? My 3D chessboard just broke.

      • VintageVNvet says:

        Thanks Wolf, especially for your very clear graphs of the situation!!
        IMHO, what this is indicating is that some or most of the foreign holders are seeing the very likely scenario of two things interrupting the vast debts being rung up by the USA puppet politicians and their oligarch owners:
        1. Complete denial of the debt in the form of some kind of revolution ”allowed” to proceed by our owners, that will wipe all such paper away and away, never to be reconsidered.
        2. Some kind of ”revaluation” of our money once again, that will make the debt about the same as our weekly food allowance,,, etc..
        So, as a result of more of our national debt being picked up by domestic individuals and various and sundry other kinds of ”people” such as corporations, etc., etc., the pain will end up being domestic, and, as usual, visited mostly on those of us who have been willing to put our 401K, and IRA, and other similar wealth retention strategies into US dollars.
        This probably falls under the old rubric of ” never give a sucker an even break.”

      • LetItRainUSD says:

        Wolf, Iamafan is likely right. Those little countries, with their bankers catering to hedge funds, anonymity and tax dodgers, were aided by the Fed. And that process requires “liquidity” until someone pulls back the curtain to find “insolvency”.

        • Wolf Richter says:



        • If Apple uses the funds it has in a tax haven like Ireland to buy Treasuries does that make them a foreign buyer? Buyers in Belgium are often surrogates for other central banks. Did the tax cut repatriation act alter the distribution of asset holders? Global corporations might want to hold US treasuries in US dollars without the currency hedge. Interesting to see if the Trump tax cuts lured these tax dodgers back into the US and then Bernie wins the election and drops the hammer on them?

      • Cas127 says:

        Excellent as always, Wolf.

        One thought – a parallel post about the dynamics of each buyer category.

        For me, Central Bank buys are toxic in a way that other parties’ buys are not.

        Because the Fed can summon new money into existence backed by nothing (or human collateral, if that really makes anybody feel better…) then Fed buying is going to definitionally create inflation in a way most other categories of buyers won’t.

        I don’t think the Fed’s “money from nothing” (and your chicks for 4x as much…) powers can ever be publicized enough.

        (Reviewing all the lyrics, it does appear that our CBs are, in point of ironic fact, Dire Straits…

        …look at them yo-yo’s that’s the way you do it
        …That ain’t workin’ that’s the way you do it
        …And he’s up there, what’s that? Hawaiian noises?
        You bangin’ on the bongos like a chimpanzee…

    • historicus says:

      Great informative article
      Now who buys the extra Trillion coming down the pike?
      PPI and core CPI almost 1% over fed funds and Fed says they are keeping rates steady.
      Rates pegged under inflation used to be considered an emergency measure ala 2009.
      Maybe it is in this instance as well….?

    • Helmut Beintner says:

      Just shifting Dung from one side to the other,i do not want it in my backyard.

    • mike says:

      I presume that by “shell countries” you mean those tax havens where the ultra-rich own US securities, businesses, real estate, etc., through chains of shell companies to keep their gigantic wealth anonymous. Those who are distrusting might also claim that the ultra-rich are using their shell companies to enable their cheating on their taxes, but we must just trust our ultra-rich aristocrats to be honest and open, even if the US government never, ever investigates nor prosecutes them, e.g., the banksters.

      I wish that I could see to whom the Fed bankster cartel lent funds this quarter. I suspect that the banksters anticipate the coming recession (since China, Vietnam, Japan, Cambodia, Malaysia, etc., will have to sell foreign securities holdings and borrow heavily to deal with the coming pandemic), and have been lent massive amounts of funds by the Fed banksters, so they are ready to buy when these securities hit bottom.

  2. Michael Engel says:

    1) QQQ is up.
    2) USD is up.
    3) German 25Y < zero, again. Al German rate up to 25Y are under water.
    4) The 30Y is 0.01%.
    5) Divergence : SPX is up, US long duration don't move, but the German yield curve ROC is in the red.

  3. Urmas says:

    Japan added 113 billions in 2019. Trying to understand, why a most indebted country in the world would want to buy so much other countries debt? Any thoughts?

    • Sara Racano says:

      How can someone with so much debt buy someone´s else´s debt? Now i´m really confused!

      • historicus says:

        BOJ balance sheet equals their GDP.
        If the Fed follows suit, the Fed balance sheet goes to 19 Trillion….and we have been following the BOJ who started all this idiocy in 2000

    • Petunia says:

      They need the income and it’s a way to hold USD.

    • Cas127 says:

      1) Just like the Fed, Japan’s CB can make money out of thin air..,

      2) By buying dollars with invented Yen,
      …Yen gets cheaper, helping Japan’s exports,
      …USD is worth more, helping Japan’s exports.

      It is truly dangerous that not enough people understand the true extent of manipulative f*ckery-pokery that CBs are empowered to engage in.

      Think of the months that Avenatti lived in CNN’s lower colon on air…then think of the nano seconds CNN has dedicated to Fed policy in the last 20 years.

      It would be disgusting if it weren’t by design (mass expropriation of interest not of interest?…sure).

      The MSM conspiracy of silence on ZIRP is prime evidence that the MSM is, at bottom, an adjunct of the State.

      Pentagon Papers, sure – *after* DC decides to write off Vietnam,

      ZIRP paper, silence.

      • historicus says:

        Central Banking is backdoor Socialism and Globalism wrapped into one. They, the unelected who are empowered by the greatest beneficiaries of their interest rate dictates , governments, self author and self expand their powers. They ignore the mandates under which they are obliged to operate (Stable prices and MODERATE / no extreme long rates) and create new mandates for themselves, uncontested. (2% inflation, climate change concerns, etc.)
        They have suspended basic economic principles like supply/demand price discovery. They have taken over and no one sees it.
        Indeed. No more business cycles. Cycles that occur naturally and flush excesses in FREE MARKETS. No cycles, and excesses are pent up and when flushed, eventually, are systemic threatening events. Central Bankers are IDIOTS. But they are insulated from any ill effects of their policies. These unelected central planners have inflation protected pensions awaiting them. No sweat, but what of us.

  4. Expenditures vs receipts have ballooned. As one analyst put it the government sector will have to take the money from the private sector to square the accounts. Monetizing through REPO the money is spent twice, once through stock market traders, and once by government as a liability. How does it end?

    • Michael says:

      Unless one believes in fairy tales…….tears for some, probably the bottom 99%

  5. Sean says:

    Please don’t put majority of the blame of RE and Stock bubble on people. Yes, they are partially responsible, but majorly lie are at the feet of Federal Reserve and CB.

    In every society, there are always dead beat. If you LOWER Lending Standard and throw money at them, they would spend it on RE and Stocks. Recalled in the past, home buying require 20% cash down payment, and hence limited bubble.

    These days? Well, if you have a pulse, only 3% needed. Once Fed open the spigot of lending with lower standards + money printing + lowering rates to historic levels, what else do you expect?!

    Japan just have the worst quarter of recession Q4 2019. But looking at the Nikkei 225 at All Time High last 5 years or close to ATH last 30 years, you would not realize it’s in big recession.

    Can’t wait for the days of revolution to bring Bernanke, Powell, Draghi, BoJ to guillotine where they fully deserved.

    • Frederick says:

      Dead beats spending borrowed money on RE and stocks I would be more inclined to think hookers and blow

      • nhz says:

        Deadbeats spending money on homes they cannot afford, first of all; easy with the lowest rates in history (Netherlands 10y fixed mortgage 1.0% plus you get full income tax deduction, but don’t think that amounts to much for the average deadbeat).

        Maybe they plan to buy the hookers and blow from the yearly appreciation ;(

        • Frederick says:

          They may soon be extremely disappointed and strung out if they’re depending on housing

      • VintageVNvet says:

        My long time truck sales guy told me the rate of non qualifiers being approved for credit has skyrocketed the last few months…
        Good guy, always has time to chat when I bring the beast in for service, etc..
        But, he too worried about the overall situation, and no one at all in the sales area,,, and not many in the service dept either, as though there is some sort of reason to stay home???

    • Beardawg says:

      True – but as long as US remains the cleanest dirty shirt – our fiat buys more of everything than anyone else’s. US / Fed has been doing this for 12 years already with no consequence. When Japan did it – no one else was doing it, so it hurt them. US consumer / investor / homeowner will be fine for another 10 years at least.

      • Cas127 says:

        Maybe, but fiat is a Potemkin Village…once one hole gets punched in the papier mache, people start realizing how the sausage gets made, and the game isn’t worth the candle anymore.

        (Mixed metaphor world record, btw)

        There can be panicked runs to exit currencies as well as banks…Americans have always thought of capital flight as some sort of alien perversion, not a logical economic response.

        The USD may be the cleanest shirt, the last bastion…but only of traditional fiat. Once people lose faith, they lose it fast and can very, very creative in finding alternatives.

    • historicus says:

      And Yellen says the Fed should buy stocks…
      I submit we are following the BOJ lockstep

    • Denise says:

      Obviously you did not come of age in the early 80’s. Our first house was FHA 3% down. 12.5% mortgage and our income equaled our loan amount. We held that house for 5 years and made the most money as a percentage of original purchase price of any home we have purchased over our lifetime. 50% over 5 years.

      More young people without deep pocket parents use FHA loan down payment loans than you would like to admit. It is a good program especially for those who expect rising incomes. Of course it works better in a declining interest rate environment.

    • Zantetsu says:

      Who only puts 3% down on a house? I’ve never heard of such a thing. Everything I’ve always read says 20%. And around here that’s a minimum of $275,000 …

      • Cas127 says:

        Is that sarc?

        Because low down pmts are definitely a thing and have been for at least two decades…

        • nhz says:

          In Netherlands downpayments were at least 10-25% in the early nineties (with mortgage rates above 10%). Then thanks to the US invention of financialization (thanks, Easy Al!) they discovered no-money-down Nirwana and by 2000 110-120% mortgages were the norm, you could even get up to 200% (buy a 200K home and get 200K extra).

          I lived for several years in an apartment where the original mortgage for the owner was 190% of the purchase price (new apartment with some extra money thrown in for nicer kitchen etc.). The owners had other loans on top of that e.g. for a foreign vacation home.

          Even nowadays almost no one in Netherlands needs a downpayment and the rubble is complaining loudly that the official maximum mortgage is now reduced just 103%, which means that in some cases you have to pay EUR 1000 or so out of pocket (for closing costs) in order to buy a 300-500K home.
          If the required downpayment goes to even 5% all hell breaks loose and home prices would crater. Dutch housing market is US subprime on steroids.

        • Zantetsu says:

          It is not sarcasm. I genuinely have not heard of such low down payment percentages.

  6. Paulo says:

    News Flash:

    Milken to replace Navarro as an economic advisor. Now, everything will make sense as this unfolds.

    • IdahoPotato says:

      What do you have against white-collar felons scrounging for the odd million to feed their kids, Paulo?

    • Petunia says:

      Milken will probably become the next Treasury Secretary, Kerik the next Attorney General, and Blagojevich the next Chief of Staff.

    • Harrold says:

      Larry Kudlow is economic advisor.

      Navarro is Director of the Office of Trade and Manufacturing Policy. I think that makes him the tariff’s Czar.

  7. Chris Coles says:

    We also need to remember that pensions funds and insurance companies are required, by law, to hold a proportion of their holdings in government debt, and thus cannot be seen as in any way reckless; after the fact.

    • Cas127 says:


      Thanks for mentioning the mandatory holdings aspect – which allows related parties to play valuation games.

      1) Say Feds rq CALPERs to hold 20 pct of AUM in absolutely safe…zero yielding US Treasuries.

      2) Until forced sale, USTs carried at face value…no matter how many US gvt downgrades – providing a phony mkt value on UST.

      3) Now yield starved CALPERs short of cash for legal pension payouts…Fed simply prints necessary amt.

      4) Goto step 1

  8. David Hall says:

    Banks, insurance companies, pension funds, investment funds, corporations, partnerships or individual investors may buy US, state, or local debt.

    Multinational companies set up factories in Mexico. They exported goods to the US and elsewhere. They took profits in Mexico and held money there or repatriated it to their home nations.

    At one point foreigners owned 40% of the US stock market.

  9. DR DOOM says:

    The FED does not want nor need the po-dunk banks that cashes your pay check that litter the great fly over areas of our country. The money that circulates in these banks are liabilities to the FED.The only banks or financial institutions that are important to the FED are the ones that have direct access and thus the benefit of the Cotillion Effect of fiat money that finances our EMPIRE. The stock market and these Cotillion entities are now the only purpose of the FED. The protection of this thin crust of affluence is paramount. Our Economic Republic has been split. Congress has handed our treasury to the FED , lock , stock , and barrel . Only Gold and its practical slave ,Silver are money, every thing else is debt . The FED’s only product is debt but it’s debt is dependent on TRUST. As long as this trust remains the debts will keep growing and growing . There are all kinds of nooks and crannies to stuff this debt into in our financialized economic system . TRUST is the only executioner of a central bank and its fiat product , debt. DOW 40k is not out of reach by any means along with its 40 trillion dollar price tag, Tighten your seat belts and hang on baby. This is going to be a bitch of a ride.

    • historicus says:

      GDP growth all coming from federal deficit increases.
      And the Fed is lender of FIRST RESORT. What happened to the Discount Window notion that repeated use brings fees and penalties?
      As noted by Wolf, a REIT cycled through $2 Trillion in six months.
      Why would the Fed allow this?
      Well, they take the money and buy long term mortgages, pounding down the long end of the curve. And people wonder why the curve is flat/inverted. They are doing the Fed’s mission.
      But wait, isnt the Fed’s 3rd often unmentioned (by design) mandate “moderate long term interest rates? Moderate means “not extreme”, and certainly record lows are “extreme”.
      So the long rates get pounded, the curve flattens, everyone says this is a sign of recession, and the Fed cuts to avert the “coming” recession.

    • Beardawg says:

      Yup – for at least another 10 years I’d say.

  10. van_down_by_river says:

    Foreign countries now understand the institution trusted to safeguard the world’s reserve currency is not trustworthy. They have lost confidence in the Fed as an unbiased and fair steward of the existing trade currency and are in process of implementing another system for international trade. When the U.S. dollar loses its trade settlement currency status it will crash in value. Savers of currency and Treasuries (also just currency) will be wiped out.

    Still holding onto to your (alleged) short position? The Dow and S&P are now up 5% since Dec. 30 (this represents an annualized gain of about 38%). Powell (and Europe/China/Japan) seems to have no intention of taking away the proverbial punch bowl and in fact the Fed has shown zero concern with inflating asset prices. It’s only a bubble if it pops and it would appear the Fed intends to never let it pop.

    S&P500 hitting 4000 in 2020 is now looking inevitable and if/when it does the targets will be raised to 5000 (we like our round numbers) and the pundits will still be saying valuations are not unreasonable because… TINA.

    • historicus says:

      So you predict the Fed will ignore inflation numbers, that they will keep extreme low long rates, and thus you predict they will continue to ignore and violate two of their three stated mandates.
      I think this a matter of concern rather than revelry.

      • nhz says:

        Yes they will totally ignore inflation numbers or manipulate them even more than they already do, and increase their manipulation of the financial markets – for the privilege of forking over the money of savers and ordinary people in general to the 1% and big business. The FED (and ECB etc.) have made their choice, no doubt about it; they can no longer reverse so they will play this game until the bitter end, and pretend of course in chorus with the MSM that this is all for our own good. We are in an epic stock market melt-up (or more accurately, fiat money crash) and not a pip from the FED except some cheap talk about “elevated asset levels”.

      • van_down_by_river says:

        Trust me, I don’t revel in this disaster, I hope Mr Wolf’s short does extremely well because it would mean we might pull back from the brink. Unfortunately for me hope is not good enough and I don’t trust the central banks to stop. Maybe they will lose control of the markets but I doubt it. If you are an ammo producer you never run out of ammo,

        • Cas127 says:

          “If you are an ammo producer you never run out of ammo,”

          But one day, you sell to the wrong guy…who shoots you in the head, then *he’s* the ammo producer.

          I know it is a new concept, but institutions tend to reap what they sow…just not maybe right away.

      • WES says:

        Historicus:. Obviously the current monetary system can continue as long as the US Fed doesn’t abuse the dollar as badly as the rest of the world’s central bankers abuse their own currencies!

        Look how long it took the Roman empire to collaspe! And they were handicapped with a real money monetary system!

        Our central bankers lost their “golf” handicap at least 50 to 100 years ago!

  11. timbers says:

    Well, as the long as the Fed plays it’s little games of removing from it’s inflation measures the items where all it’s money printing, liquidity expansion, and QE flow into…and just measures inflation of things The Little People with little money buy much, seems the Fed continue it’s game for a very very long time.

    Note the Fed just said assets are elevated.

    Not inflated, but elevated.

    • Cas127 says:

      Elevated to a “permanently high plateau”

      When these CB’ers go home at night, I’m sure they all have that Geithner-in-the-tumbrel look. They know the jig is up.

  12. Michael Engel says:

    1) For over a year all US % rates from 1M, 3M, 1Y, 2Y…to 30Y
    lurch down. When % rate are down, prices go up.
    2) Since China assets are down, instead of up, they either sold UST, taking profit, or lent UST to their large banks as a collateral to swap $ debt.
    3) Since Jan SSEC is trending down, while $USDCNY is up, both showing a sign of weakness.
    4) After falling from the Dec 1989 peak over 50%, the Nikkei was in a trading range, resting for 3Y, making a lower high @ 22,757 in the June 1996 LPSY.
    It took 12 long years to breach the 1996 high. For 2Y, since Jan 2018, Nikkei osc above & below 1996 high.
    5) Since Oct 2008 nadir the Nikkei had a jump and a vertical bull run til 2018, but the Japanese GDP in 2017/18 was $4.8T, lower than 2010 GDP @ $5.7T and lower than 1995 GDP @ $5.37T.
    6) China

  13. Michael Engel says:

    Today SPX high reached 3,393.52.
    Market makers will nor rest tit they send SPX > 3,400, even if coronavirus hit wall street.

  14. VeryAmused says:

    I believe the world is pushing very very VERY hard on a string at this point in time.

    I live in a fairly affluent region in California and work at a technology company that is all but a monopoly. This is certainly anecdotal evidence but what I have seen transpire around me over the last 1 to 2 years reminds me a lot of what transpired during and AFTER the GFC. These are the good times, right?

    A lot of damaged cars on the street not being fixed.

    Upscale dining establishments half full.

    Houses busting at the seems with people.

    Managers at my (technology monopoly) company turning the screws.

    People looking burned out and miserable.

    It has been over a decade since I felt like something was about to explode. A lot of the data has been telling me things appear to be about to explode even though they have not…but this feeling…I don’t know…

    • Cas127 says:


      (I lose track of the Amuseds here…)

      Pro-gvt Keynesians really should love blow-off tops – in the Keynesian world view, personal savings are the enemy – representing a pool of “idled” capacity in the world machine that Government tends, causing output to fall below some idealized “optimum”.

      Blow off tops are simply the orgasm of Keynesian release, liberating savings from savers and compelling everyone back to work, building the Pharaoh’s “optimal” tomb.

    • Jeff Relf says:

      Lawlessness is back; it’s pissing me off.

      Same thing happened back in 2005–2009.

      Kids are looking for a thrill;
      drugs, thievery, squatting and video games.

      I don’t hate kids,
      I’m just relating some (sad) facts;
      please don’t shoot the messenger.

      The richest, best educated countries
      have the lowest “fertility rates”
      ( kids per woman per lifetime ).

      It’s just a fact;
      I’m not bashing feminists,
      nor anything like that.

      Trust Fund kids are a bad idea;
      they only know how to spend it, not earn it.

      Don’t build mansions on shifting sand dunes,
      blown by the winds of money, oil and information.

    • DR DOOM says:

      VeruAmused : I live in Appalachia and my observations,albeit from a lower vantage point ,is remarkable in their agreement with your posts observations.

    • Lisa_Hooker says:

      What you describe is exactly what I saw in 2006/2007/2008 as a senior project manager in embedded systems software development for a Fortune 50 telecom corporation. After 5 years of annual multiple layoffs (actually terminations) beginning around 2000. About 2008 we started dramatically increasing the movement of development work offshore, increasing layoffs and selling off divisions. Morale? The beatings will continue until morale improves.

  15. Michael Engel says:

    1) SPX is up, because wall street have a trust in Big$Mike.
    2) Big$Mike don’t have to charm anyone, all he have to do
    is to stay cool under Burnie fire and provide a reasonable 4Y plan.
    3) If he dominate the mic, SPX will jump > 3,400 by Fri.

  16. travis lewis says:

    Surely the coronavirus shorts, have all closed by now.?

    • WES says:

      Travis:. Or maybe they have all gone broke!

      China is doing a better job of clamping down on coronavirus leaks!

      Notice that we are hearing less and less about the coronavirus lately?

  17. FinePrintGuy says:

    Things could get interesting when the SS Trust fund and gov pensions turn from net buyers to net sellers. SS trustees themselves say it’ll happen…

    • WES says:

      FinePrintGuy:. You and I know at some point they will have to sell some of the IOUs!

      Because this is something we “know”, then in this upside down world, what we “know” is obviously wrong!

      Therefore the new truth is that at some point they will have to buy more IOUs!

  18. Penny Wise says:

    So question for the group. How do we get out of this mess? Doesn’t seem we can grow our way out. If no way out, how long can we go? What’s the tipping point for debt/gdp before we can expect an all out collapse?

    • 911truther says:

      I have no idea what makes the bubble pop. Seems like the Fed could just buy all the US Gov debt forever and the Fed Gov can spend as much as it wants to on endless wars and faking outer space. AND the Fed can buy all the worthless debt issued by the banks on 3% down payment housing and sub-prime auto loans. There is no limit to how much money the Fed can print now that the entire world is on a fiat system.

      Logic tells me it won’t work. Logic tells me you can’t have car salesmen tell their customers the best way to get a new car is to stop paying on the one they’re driving, wait for it to get repossessed and then they’ll qualify for a new loan. Logic tells me the bubble will pop, but I just can’t figure out what makes a bubble pop. I’m short the stock market, I desperately can’t wait for it to pop. I just don’t know why a bubble pops.

    • WES says:

      Penny Wise:. I think we are fine as long as we do not run-out of new words to describe rich people!

      When I was a boy, millionaires were considered rich!

      Then as I grew up, billionaires were considered rich!

      Now in my declining years, trillionaries are considered rich!

      Do we have another new word to describe who is rich, after the word trillionarie doesn’t cut the mustard?

    • Cas127 says:

      The scary thing is that some other mjr nation (looking at you, Japan) will probably hit the wall first (in aggregate across gvt/Corp/household sectors, Jpn is markedly more indebted and has been running ZIRP longer).

      In trying to save them, the US may engage in a discontinuous jump in its own debt, unexpectedly.

      (One sign of how desperate Jpn may be after 30 yrs of ZIRP – they have implemented and hiked consumption taxes in an essentially no growth economy…likely because they fear they have reached peak survivable debt…)

      Re trying to stop these roads to ruin – It is depressing, but given the Gvt’s absolute addiction to deficit spending since 1970, there is a better than fair chance that America as we understand it will cease to exist.

      DC appears much, much more committed to ruin than change – because change will lessen their power today and ruin…ruin is only something that will happen tomorrow.

      That is America’s “elite”…and has been for 50 yrs.

      From a personal perspective, diversify into some store of value other than the dollar – metals, small business providers of necessities, crypto once perfected, RE if you are okay with volatility and vulnerability to taxation, ditto squared for stocks – but use lower PE index funds, etc.

      Movements away from the dollar actually might help to save it…since losing their locus of economic control is likely the only thing that DC will pay attention to.

      • Frederick says:

        Just stay away from waterfront real estate or areas prone to flooding/ hurricanes according to Greta anyway
        I just read that they found “ debris” in the fuel tanks of new, unused 737 Max planes Unbelieveable watching a once great aircraft company destroy itself for the bottom line

  19. No Expert says:

    Penny Wise, capitalism is eating its own tail to survive. There doesn’t seem to be a way out. Perhaps its less about fixing the system and more about building resilience to its collapse, i mean market correction. The big risk is the demagogues and the bombs.

  20. Anmol says:

    When will price discovery return to the markets if the feds keep on buying bonds and stawks?

  21. Iamafan says:

    I highly recommend folks read this first FROM THE TREASURY:


    This will give you an excellent background on how to read and use TICDATA.

    After you read it, then you can follow the TBAC minutes every quarter.
    Read the Treasury Presentation to TBAC around page 40.
    V. Demand
    F. Foreign Awards at Auction and
    G. Foreign Holdings : Official and Private

    Look at the graphs there.
    As of 2019, Foreigners held about 30% (more) of T BILLS and
    about 45% of Treasury notes and bonds.

    Who owned the rest?
    There’s about $17 trillion of outstanding T’s.
    In the end of 2019 the Fed reported Securities held in custody for foreign official and international accounts = 3,398,201 (in millions). The rest of the T’s owned by foreigners are kept outside the Fed.

    TICDATA mfh reports for Dec 2019, For. Official = 4077.6 (in billions). So about $600b (the difference) is not in the Fed (or in banks).
    The rest (6696.3 – 4077.6 = 2618.7) in billions must be in private hands.
    $6,696.3 trillion out of $16,673.3 billion is about 40% (foreign). Therefore the remaining 60% are the Fed, Primary Dealers and Directs in the USA.

    Does this make sense?

  22. Robert Hakker says:

    Read every comment; Suggest blaming the politicians as they are the source of growing debt.
    Honestly, how can debt grow over $20 trillion with no intention of ever paying it back – ponzi scheme. Obama admin doubled debt from $10 to $20 tril in only 8 years and now even more. Politicians globally have always been the means to the end, they’re pretty, not pretty smart.
    Fed is stuck, refuse Repo and interest rates rise – causing even more interest on debt, higher dollar, and more capital to USA. Lower rates and no room to move in a GFC, & kills pension funds even more.
    Just once take a look at everywhere but USA and you’ll see why S&P is making new highs. Capital is pouring in, no where to run, Euro & Eurozone is DOA, Asia sick not just from Corona. Developed nations’ governments in desperate need of tax revenue, they spent more than their GDP can handle, and currencies reflect all this. The dollar not necessarily rising, the others are falling.
    A correction to the S&P, yes, soon, but after that the clear loser will be foreign government debt, banks, sovereign pension funds etc.
    Remember, the great depression started with Austrian bond defaults. It’s a global economy, always has been, connected, one dependent on the other. But the weakest go first, the strongest last.

  23. historicus says:

    What is the nightmare scenario?
    A plunging stock market tipped over by an unforeseen event or geo political conflict.
    Coupled with zero interest rates. ie, No Place To Go.
    Courtesy of the “brilliant” central bankers who then crawl back into the woodwork, throw their hands up, say their theories were “flawed”, then sit back and collect their inflation protected pensions.

  24. WSKJ says:

    In the last week or so, I heard a pundit on CNBC say that the Fed really doesn’t worry about the size of their balance sheet; as long as they are controlling interest rates, they are happy.

    One could look at the interest rates CHARGED on credit card debt (see recent Wolf post), and the interest rates PAID to middle class accountholders on savings and checking accounts, and it is clear that the Fed’s concern re interest rates only extends to SOME interest rates.

    Oh, but wait, on February 13, 2020, Rick Santelli stated that Judy Shelton (Fed candidate) had wanted normalization of interest rates back in the Obama years, but has been coming around to the realization that the American middle class is in fact benefitting from Wall Street’s decade-plus run-up. If you are in the Beltway, you are going to come around to appreciate that the wealth effect has brought wealth to the entire nation, not just the wealthy (SARC).

    Have just been listening to selections from Samuel Pepys’s diary: as I understand it, there were a number of the affluent who took to burying currency in their yards, as the Great Fire of London closed in on them.

    Pepys scholars, let us know whether there was any follow-up entry on how the buried currency survived the fire…..am guessing that the Fed members put their trust in their safely stowed wealth, rather than depending on their pensions.

    Very informative post, and fine charts, thx Wolf.

  25. Klaus Kastner says:

    “Mexico and Germany disprove the theory that countries that run a big trade surplus with the US have to hold large amounts of US debt.”

    If the above is indeed a theory, then it is a false theory. First of all, what ultimately matters in terms of cross-border capital flows is the current account balance and not the trade balance. Current accounts are a zero-sum game world-wide. If Germany has a current account surplus of, say, 300 BUSD, then it must export capital in the very same amount to the rest of the world. Note: to the rest of the world but not to any one specific country. If, say, 100 BUSD of the above 300 BUSD current surplus is with the US, Germany can but does not have to export capital into the US market. If it does, there are many alternatives to investing in treasuries. If it does not want to, then it converts the capital export into other currencies and others buy treasuries.

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