Who Bought the Gigantic $4.5 Trillion in US Government Debt Added in the Past 12 Months? Everyone but China?

Someone had to buy the Incredibly Spiking US Gross National Debt. Here’s who.

By Wolf Richter for WOLF STREET.

Remember the ridiculous and quaint charade around the “Debt Ceiling” in Congress and the White House? Me neither. But those were the Good Times. So what we now have is the Pandemic Economy with the Incredibly Spiking US Gross National Debt, which spiked incredibly by $4.45 trillion over the past 12 months, to $26.5 trillion.  WHOOSH go the trillions, flying by.

But here is the thing: These are all Treasury Securities – and someone had to buy them, every single one of them. But who?

With today’s release by the Treasury Department’s Treasury International Capital (TIC) data through June 30, and with other data released by the Federal Reserve, we can piece together the puzzle who bought those $4.45 trillion in Treasury Securities over the past 12 months.

Foreign investors: nibbling on it.

Foreign central banks, governments, companies, commercial banks, bond funds, other funds, and individuals, all combined added $90 billion to their holdings in June compared to May. Over the 12-month period through June, they added $413 billion. They now hold a total of $7.04 trillion, a huge record pile.

But given the incredibly spiking US Treasury debt ($26.45 trillion on June 30), their share of this debt plunged to just 26.6% — the lowest since 2008. The quarterly chart shows foreign holdings in billion dollars (blue line, left scale); and the percentage of total US debt (red line, right scale):

Japan and China, the two largest foreign creditors of the US, combined held 8.8% of the US debt, the lowest share going back many years. Back at the end of 2015, their combined holdings were still 12.8% of the total US debt.

Japan maintained its holdings in June for the third month in a row at $1.26 trillion, but over the 12-month period increased its holdings by $138 billion.

China cut its holdings in June by $9 billion, to $1.07 trillion, and over the 12-month period by $38 billion, which follows the trend since 2015, with exception of the V-shaped plunge during peak-capital flight, and the recovery afterwards:

The next 10 largest foreign holders include many tax havens and financial centers, such as the UK (City of London financial center), Belgium (home to Euroclear), Ireland, the fertile breeding ground of mailbox-entities of many US corporations established there to dodge US taxes. The Treasuries that US corporations hold in those mail-box accounts established in Ireland count as Irish holdings. In parenthesis are Treasury holdings as of June 2019:

  1. UK (“City of London” financial center): $446 billion ($341 billion)
  2. Ireland: $330 billion ($261 billion)
  3. Luxembourg: $268 billion ($230 billion)
  4. Hong Kong: $266 billion ($217 billion)
  5. Brazil: $264 billion ($312 billion)
  6. Switzerland: $247 billion ($232 billion)
  7. Cayman Islands: $222 billion ($225 billion)
  8. Belgium: $219 billion ($200 billion)
  9. Taiwan: $205 billion ($175 billion)
  10. India: $183 billion ($163 billion)

Despite the mega-trade deficits that the US has with Mexico and Germany, their holdings of US Treasury securities are relatively small: Germany held $80 billion and Mexico $47 billion.

US government funds

The Social Security Trust Fund, pension funds for federal civilian employees, pension funds for the US military, and other government funds added $50 billion in June and $112 billion over the 12-month period to their holdings, which reached $5.95 trillion, or about 22.5% of total US debt.

These Treasury securities, often called “debt held internally,” represent assets that belong to the beneficiaries of those funds. They’re a true debt of the US, and they don’t go away – “it doesn’t count because we owe this to ourselves,” the silly line goes – just because American beneficiaries are indirectly the holders of these assets.

The Federal Reserve loads up.

In June, the Fed added just $95 billion to its pile of Treasuries, having already cut back its purchases, after having added $1.6 trillion from March 11 through the end of May, bringing its total holdings at the end of June to $4.2 trillion. It holds about 15.9% of the US debt.

Over the 12-month period, the Fed added $2.1 trillion in Treasuries to its holdings, about doubling its pile over the period (weekly chart through August 12, here’s my analysis of the Fed’s latest asset purchases):

US Commercial Banks load up too.

Just over the month of June, US commercial banks added $121 billion in Treasury securities, to a total of $1.07 trillion, according to the Federal Reserve’s data release on bank balance sheets. This brought the 12-month increase to $220 billion. They hold about 4.0% of the total US debt.

Other US entities & individuals

That’s everything that is not included in the above: US institutional investors, US bond funds, pension funds, insurers, individuals directly or indirectly, cash-rich US corporations, private equity firms, and highly leveraged hedge funds engaging in complex trades – such as long cash Treasuries and short Treasury futures, which blew up in March and which were bailed out by the Fed, as was confirmed in an editorial by William Dudley, former president of the New York Fed.

They all piled on Treasury securities, possibly in panic, possibly hoping to be able to sell them at even lower yields and even higher prices to the Primary Dealers to sell to the Fed.

By the end of June, over the course of the tumultuous second quarter, these US entities added $1.6 trillion, after having been big sellers of Treasuries in prior quarters. This brought their total holdings to a mega-record of $8.13 trillion – about 31% of the total US debt.

The chart shows Treasury holdings by holder. US banks and other US entities are combined into the yellow field, which, along with the Fed, bought the majority of the Incredibly Spiking US Debt in Q2:

Over 30 million people lost their jobs between mid-March and mid-May. But the wealth of America’s 600+ billionaires ballooned by $434 billion. How did this happen? Listen to my podcast…  THE WOLF STREET REPORT: The Rich Got Richer in the Pandemic. Why?

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  155 comments for “Who Bought the Gigantic $4.5 Trillion in US Government Debt Added in the Past 12 Months? Everyone but China?

  1. Wendy says:

    Since the buyers of treasuries can remain anonymous, and the Fed can add more debt at the click of a mouse, and foreign countries are not buying enough to account for the total, could the Fed be secretly buying treasuries in the Caymans, and other opaque locales? That way an unlimited number of treasuries can be issued, and there will always be a buyer, and since the secret buyer is the Fed through an offshore account, Wolf can keep writing articles wondering who is buying the excess, but as long as only Wolf, and not the mainstream press is asking questions, the scheme can continue undetected.

    • Ravi Uppal says:

      Wendy , I agree with you . Of the 10 entities 7 are countries with opaque banking regulations . Black operations via front entities to mask the Fed behind the curtain scenario .

    • historicus says:

      The Fed answers to no one..
      and what politician would interject themselves into a stock pumping arrangement?
      Only in the “bottom of the ninth” people will start asking, “how did we get here?”
      And it will be the demise of the currency via inflation…..

    • Wolf Richter says:

      Wendy,

      “…could the Fed be secretly buying treasuries in the Caymans, and other opaque locales?”

      The answer is no – for a number of reasons. But more importantly: It wouldn’t want to because it would destroy the purpose of those Treasury purchases.

      The Fed’s biggest tool is “jawboning” — filling the media with what it might do… all the Fed hype is the result. So at first there are hints, and then there are announcements. And the market reacts wildly to those hints and announcements. And then the Fed doesn’t actually have to buy much – see corporate bonds. Everything the Fed does to repress yields and drive up asset prices starts with jawboning. By doing anything “secretly,” it would lose its impact on the market, which is to repress yields and drive up asset prices, particularly of Treasury securities.

      • Wendy says:

        Well then, who is the mystery buyer? If there were insufficient buyers, interest rates would have to rise to attract them, right? Can unlimited numbers of treasury bonds be sold to the mystery buyers? Apparently so, since the pit appears bottomless.

        • Wolf Richter says:

          For example, Apple is a huge holder of Treasury securities. During the Senate investigation some years ago, it revealed that much of it was held in its mailbox accounts in Ireland.

          All big US companies do that to save on taxes. Even smaller companies with big profits.

          It’s part of keeping “profits” overseas so that they’re not taxed in the US. It’s legal, and there is no mystery.

      • cb says:

        @ Wolf –

        can buyers of treasuries remain anonymous?

    • sidney weiner says:

      The world’s exporters have been shipping their goods to America for I.O U.s since 1971 when President Nixon closed down the last gold window for foreign payments.
      They are all locked into a Global Economy dependent upon the American Mass Volume Consumer Market!
      If America financially tanks,…the rest of the Global Economy will collapse as well.
      “America can win the Global Financial Beauty Contest by being the least ugly”

    • Ed Smith says:

      The point is that there is always a buyer. Treasuries are top shelf collateral for the all-important Eurodollar. People talking about dollar collapse or decline are really asking you to sell them your dollars

      If the dollar is collapsing, why is the rate so low? Why is there never a failed Treasury auction?

      If anything, the dollar is far too strong. It means the economy is weak and there is no growth.

      • Randy says:

        The dollar is collapsing, anybody who says different is in denial. Which I see lots of denial today. The dollar loses purchasing power every day. If that is not the dollar collapsing then what is it? You can call it inflation or any fancy label you want. But the fact is the dollars purcashing power has collapsed and will continue to collapse. Now does anybody out there think they can prove that statement wrong? I didn’t think so. The dollar is collapsing and will continue to collapse till it is toilet paper. Come on somebody contradict that statement.

  2. andre says:

    China is not stupid. Why buy American debt which will only be paid back with a currency which is rapidly losing value.

    • Countrybanker says:

      They do buy. They have bought treasuries for years. They do it because they sell products and their largest customer is the u s market. We do not have products they want and we also do not have cash, in any foreign currency. We do not have dollars either. We have IOU’s ..they take them.

      So you are wrong with your rhetorical question. Are they slowing their acceptance of promises back by the American citizens. Yes. But they do not have enough other buyers to replace our “buys” with better consideration.

      • cb says:

        Countrybanker said: ” We do not have dollars either. We have IOU’s ..they take them.”
        __________________________________________

        ???????????????
        Chinese companies export a lot of goods into the United States and receive dollars for those goods. Those dollars buy a lot of Treasuries.

        • Frank says:

          Thank you.

        • They never see those dollars. PBOC accepts T Bonds held in reserve, (you just type a name, or BIS, it’s easy) and they print Yuan which they distribute as new credit. Both sides would like to see more capital controls, and the PBOC is eventually as large and as powerful as the FED, while they monetize Treasuries.
          Bloomberg: “After receiving dozens of phone calls and text messages from banks touting cheap, unsecured and easy-to-get consumer loans, Eric Zhang visited one of China’s largest lenders in June and borrowed 400,000 yuan ($57,600) at an interest rate of 4%. But there was a catch — he had to sign a letter promising the money wouldn’t be invested in property or stocks. That didn’t stop Zhang. A few days later, he’d found a merchant who helped him make a fake purchase and move the cash to his brokerage account. ‘I don’t think the bank can track the money and identify its real use,’ said Zhang, who works at a… private equity firm. ‘It’s a great trade for me,’ he said, after seeing his fresh stock investments surge 6% in one month.”

        • Randy says:

          Dollars are debt. So the previous statement of iou’s is correct. All dollars are borrowed into existence.

        • cb says:

          @ Randy –

          I hold some dollars right now. They are on my balance sheet as assets. I can use them to buy goods and services.

          Apple has Billions of dollars as assets on its balance sheet.

          To make a blanket statement that dollars are debt is not correct and confuses a lot of people.

        • Wolf Richter says:

          cb,

          That’s the discussion you get into when people like Randy confuse paper dollars (Federal Reserve Notes) that the Fed carries on its balance sheet as liabilities (“Currency in circulation”), with dollars as a unit of measurement or account, similar to “square miles.”

          To explain unit of measurement or account: You own property that is measured/accounted for in square miles. You own assets that are measured/accounted for in dollars.

        • Randy says:

          Ok wolf your comparing units of currency to units of measurement. A square mile is a square mile today and will be the same square mile tommorow. Units of measurement stay constant. Currency is borrowed into existence and is not a constant. A dollar today is worth more than a dollar tommorow. You even admit it’s a liability. I guess it depends on your understanding of a measurement to mine. All dollars are borrowed into existence(liability). I do not consider the dollar as a asset because tommorow I could wake up and that dollar might not buy nothing. It’s only a asset if you spend it today. So we can argue this point all day. But my statement still holds true. Dollars are debt borrowed into existence. You can’t change that fact no matter what fancy label you put on it. And how do you know what the Fed holds as assets or liabilities? They have not been audited. You take there word at face value. Technically a dollar is a unit of measure, rather it was a unit of measure 1 ounce of silver. That dollar sure is a nice asset lets see you exchange it for that ounce of silver.

        • Wolf Richter says:

          Randy,

          Units of account and currency are not the same concepts. “Unit of account” is an essential function of a currency. But it’s not a currency. When you say that your house is worth $500,000, there is nothing “borrowed into existence” about the $500,000. You don’t own the dollars, it’s just a measure — you own the house. You can sell the house for euros, say €450,000, if you want to. Or for yen. Or you can trade it for another house. No dollars involved.

          You can use all kinds of measures to describe your house. And if you have a mortgage on that house, that’s a separate entity, a financial liability, that’s measured in dollars. You just use a measurement, a unit of account, namely dollars, to describe your house.

          The relationship of house to dollar or euro or yen is not constant because things change. But one dollar = always one dollar.

          You can use all kinds of measures to describe your house. And if you have a mortgage on that house, that’s a separate entity, a financial liability, that’s measured in dollars. You just use a measurement, a unit of account, namely dollars, to describe your house.

          The relationship of house to dollar or euro or yen is not constant because things change. But one dollar is always one dollar.

        • Randy says:

          Oh and under your theory of the dollar being a asset because it can buy goods. My credit card can also buy goods so I guess under your theory just because I have a credit card. I can write that down as a asset. Because it too can by goods along with just my signature, so I guess I can also count that as a asset. Fiat currency is insane. You constantly have to borrow more into existence to pay off the previous debt because there is always more money owed than lent because of interest. It’s a death spiral from the beginning of its birth until eventually there is too much debt and it collapses under its own weight. People who don’t think currencys collapse have short memories. I’m sure most people who are on this site have lived thru one already.

        • Randy says:

          Ok one more thing that should make my point clear about “dollars are debt borrowed into to existence” every dollar out there is owed. Example which even a child could understand: If you work for the government your pay comes from borrowed money. Why do you think we owe $28 trillion dollars. And much much more is owed privately. So as I stated before all dollars are debt that is owed to somebody who borrowed them. I don’t care if it’s Apple that’s has them dollars or the common person that dollar is still debt owed by someone.

    • MiTurn says:

      “China is not stupid.”

      Perhaps not in regards to buying American debt obligations, but in other ways maybe they are. They’re driven by their own CCP narrative, as can be seen in Hong Kong. Would they be foolish enough to attempt the same in Taiwan? Yes, I think that they would be.

    • sidney weiner says:

      Where else can they dump their inferior products in large volume?
      America has a financial advantage no other nation has,
      The American Working Middle Class retail consumer.

      • kam says:

        “America has a financial advantage no other nation has,
        The American Working Middle Class retail consumer.”

        Correction, not has, but “had”.

        The American Working Middle Class once “had” incomes and a future. Long ago offshored and replaced with borrowing, both public and private.

        The equivalent of burning the wall paneling to keep warm. Sooner or later you need to burn the wooden structure that keeps the roof over your head.

    • sunny129 says:

      US $ is the America’s major export!

      The demand is always there! Why?
      It is backed by Democratic Country over 200 yrs, properties protected by legal- constitution, backed by infinite capacity of the Congress to tax their US citizens’ global income ( Deficit spending with zooming DEBT) and a strong a military presence in the world – over 600+ bases around the world. For most of trades of commodities in the world the global (>60%) currency is US $!

      Now compare to outside-other countries and their sovereign bonds- 0ver 13-15 Trillions in NIRP!
      10 yr 0.5% -0.8% looks tempting! Besides Corp Credit Bond is openly supported by Fed!
      No other currency cab replace US $ in the near future!

    • Wisdom Seeker says:

      Depressing to see that not one of you guys following Andre actually READ THE ARTICLE. Wolf’s chart shows quite clearly that the Chinese have been net sellers of US Treasuries, almost continuously over the past 5 years. That’s in absolute terms. As a share of the total supply the Chinese fraction is dropping even faster.

      Guess some people refuse to let a little data come between them and the defunct economics they worship without question…

      P.S. The US absolutely has stuff that the people of China want: land, housing, financial markets that aren’t corrupt to the bone…

      • kam says:

        @ Wisdom

        China wants, desperately needs U.S. dollars to keep buying, propping up the Yuan.

        What’s worse than a Central Bank in a purported Democracy? A Central Bank controlled by a corrupt Dictatorship that fooled itself into offering the peasants hope.

        Great Expectations are a dangerous thing.

      • Gandalf says:

        WS,
        Xi’s institution of strict capital controls since 2016 have cut off the buying spree of the rich Chinese citizens. They can’t get their money out of the country.

        So all the dollars we are sending to China as a result if the massive trade imbalance are piling up somewhere since China is divesting itself of US Treasuries.

        It would be interesting if Wolf or somebody could find out what China was doing with its overload of dollars – letting them pile up at zero interest? Converting to other currencies? Buying NIRP Euro and Japanese bonds (highly doubtful)?

        Buying mass quantities of gold/precious metals, raw materials, supplies, petroleum for the Coming Apocalypse and/or escalating conflict with the US? I’m guessing this would be the most likely

  3. Envisliberty says:

    Well; What will happen eventually? The US will default? If yes, when?

    • Wolf Richter says:

      The US government will never default on its debts because the Fed can always create more money and bail out the US government. However, there will be inflation… even 4% a year will destroy much of the purchasing power of a 10-year bond that yields 0.7%.

      • Gandalf says:

        Right, but with hedonics and substitution thrown into the official CPI will continue to be whatever the BLS wants it to be.

        It’s already well documented that the rates of inflation for education, healthcare, and new home construction have been going up at 5-10% per year for the last 30+ years, ever since the CPI started getting rigged to produce lower numbers.

        Now food prices and other essentials are going up. Only gasoline is not going up.

        What’s next for substitution- from beef to chicken to tofu?

        • Mr. House says:

          “Now food prices and other essentials are going up. Only gasoline is not going up.”

          Gasoline didn’t go down either. From March until now its been a steady $2.40 something. PA has been ramping up taxes on fuel the last decade so we don’t even get relief on that when things go haywire. With regards to Jawboneing wolf, that 3 or 4 trillion they printed up in March seemed more action then talk to me.

        • Bobby Dents says:

          They printed up 3-4 trillion???? Nope, you mean government debt did that. The Fed didn’t print a thing and can’t.

        • cb says:

          @ Wolf –

          Bobby Dent said: “They printed up 3-4 trillion???? Nope, you mean government debt did that. The Fed didn’t print a thing and can’t.”
          ___________________________________

          My understanding is that the FED expanded their balance sheet by Trillions of dollars to buy assets with those newly created dollars. The FED created money. Yes or no?

        • Wolf Richter says:

          Yes. The Fed creates money every time it buys any security, and it destroys money every time it sells a security or if one of its securities matures and it gets its money back. The Fed doesn’t sit on a cash account, like a corporation would.

        • Lee says:

          Tofu is good – when it is in stock!

        • Wolf Richter says:

          Lee,

          My wife makes tofu herself. Buys the soybeans in big bags online. Uses a Japanese gadget that boils and grinds them just the right way. Then she has to separate the milk from the fiber. She bakes the leftover fiber into granola-type stuff that we mix with our cereal. Freshly made tofu with a little salt on it is super delicious — no comparison to store-bought tofu. But the quantities are small, and given how much tofu we eat around here, we still end up buying most of it. But the real treat is freshly made tofu.

        • MonkeyBusiness says:

          Not just tofu. I never understood how delicious milk can be until I went to a farm in Germany.

          In the US, we truly live in the Matrix.

      • Ed Smith says:

        This assumes people are buying Treasuries for return. They aren’t. It is either security or collateral. Holders are already losing money on the Treasury return, and yet Treasury prices are high. China would never sell Treasuries unless they needed dollars. People don’t understand the function of collateral in the economy. But you can see what happens when banks buy Treasuries; they keep them. This shows the opportunities aren’t out there. Where are the dealers?

      • sunny129 says:

        The ‘REAL’ rate is already neg -1.0 to neg -1.5%!
        The US $ is loosing it’s purchasing power almost every year since the creation of Fed-1913!

      • topcat says:

        Ah, the inflation fairy “sometime in the future there will be inflation, mark my words….” I have been listening to this for about 20 years now and still there is no inflation in Japan or Europe or the USA. Only the stock market is being inflated.
        I won’t mention MMT again as it seems to cause stress, but do try reading Stephanie Kelton’s “The defecit Myth”

        • Lee says:

          “………..there is no inflation in Japan”.

          Well I guess it depends on the individual person’s situation just as in any other country.

          There has been huge inflation for Japanese people in terms of what they pay for national health insurance and national pension costs over the past 40 years.

          The cost of water and water services have also increased by huge amounts.

          At the same time incomes in Japan have not grown much at all and in some sectors have fallen like a rock.

          What you need to buy in terms of the number of hours of work has increased by a huge amount.

          There is no way that I could even come close to making what I made in Japan 25 or 30 years ago.

          Imposible in yen terms, yen per hour terms, US dollar terms or even in the number of hours available to work in a week.

        • Happy1 says:

          I can’t speak to Japan or Europe.

          But there has been absolutely massive undercounted inflation in the US in the last 20 years. The cost of home in Denver, where I live, has doubled, the cost of college has roughly doubled, the cost of health insurance has doubled, those three items constitute half of what most people spend their money on. Restaurant food is about 50% higher. A haircut at Great Clips, where I get my hair cut, is 16$ instead of 10$. A new car is 25K instead of 18K.

          These are direct consequences of Fed policy. If you can’t see it, it’s because you are aren’t looking.

        • VintageVNvet says:

          Way off cat, inflation in every needed life support item has been Way up for at least the last 50 years or so, compared to the 40 or so years before that.
          Grandma lived 20 years on a 6% annuity that paid all her bills, while her SS was a bonus… Try getting it that way these days!!
          I sold newspapers for 5 cents in 1951-3,,, now $1 or more for half or less the pages; my apt in Berzerkeley was $50/month in 1970, now $2500 for the exact same apt.
          Don’t have a clue where you might be coming from with the not inflation nonsense,,, just ain’t true!!

        • MonkeyBusiness says:

          Hei at least the cost of tablets, etc have remained stable.

          Look, if you are hungry, I’d suggest eating the internals of your electronic gadgets. That’s probably the Fed’s eat your cake moment.

          I have friends in South East Asia, and they too are reporting inflation in daily necessities.

    • The accountants are not making the call. A default might look like this. The Fed caps its balance sheet, and does not monetize new spending, for political reasons. That will allow markets to set yields. Foreign buyers funding our deficit. US credit rating is restored, and the dollar is strong. Bond equity held in lower yielding securities takes a haircut. While the economy is taking a nap this is probably a good time to normalize rates. The monetary aspect of inflation is already priced in, so the other shoe drops. Inflation is synonymous with growth, blah blah. The initial hit to asset prices recovers quickly after inflation returns on the consumer side. Europe is in no position to raise rates, nor Japan.

    • sidney weiner says:

      If The USA defaults,the rest of the world will default as well.
      We will all then start over again minus the Central Reserve Bankers!

    • Lisa_Hooker says:

      Next Thursday at 10:31 EDT.

  4. Marc 60 says:

    At this point does it really make any difference at all irrespective of which currency you wish to choose or in fact all of them together. There is quite simply more debt in the world then their is money so just how or when can it ever be paid back. The simple answer is it can’t and won’t the biggest Ponzi scheme known and created by man is going to implode in such a way that no one is getting out alive. Not only is this sad but true but its getting closer then most think IMHO.

    You can fool some of the people all of the time and all of the people some of the time, but you can’t fool all of the people all of the time or forever.

    • Xabier says:

      Even more accurately: there is more debt and civilisational complexity than there are sufficient utilisable resources.

      That’s the killer.

      Quite literally.

    • Mel says:

      That’s a question that has me puzzled: there’s more debt in the world than there is money, so how did the lenders get the money they lent? Where do those lendings come from?

    • onionpatchkid says:

      Exactly. It is history’s biggest Ponzi scheme. Except the government is above the law and no one will go to jail for it. Same with Social Security. It’s just a huge and legal Ponzi scheme. I wouldn’t pay 10 cents on the dollar for a US Government Bond. I’m not counting on getting a dime of my Social Security back either. It’s just a matter of time and I fear the time is going to come soon. We have been duped.

      • VintageVNvet says:

        Do not despair of your SS OPK:
        I thought the same exact way years ago when it seemed I was pouring into it 15% of my ”net” income either myself or half and half paid by an employer, which was net the same thing, eh…
        And, certainly, so far, I have not received it all back if it had been compounded for 50 years from my first payments; added to that was a couple of scumbag employers in the 70s who deducted and did not send their half or mine to the IRS.
        But, without doubt it is very helpful for me now at age 75 and finally actually retired, having gone back to work 3 times due mainly to boredom, likely the most difficult part of ”retirement” for many folks…
        As Wolf notes above, the USA is not going to default, just let inflation steal our money as has been done since the Federal Reserve Bank was set up to protect the rich at the expense of We the Peedons, and very likely at the same overall average rate.
        While sales types will tell you that you cannot save your way to wealth, that will depend on your definition of wealth; what clearly you can do, as many on Wolf Street will tell you, is save your way to a reasonable level of safety, especially if you are able and willing to build your own house, or remodel a couple first and then your own, IN ADDITION to a normal steady job, independent contractor or employee.
        Most, if not all of the ”self made” folks I have known have worked at least two different jobs for at least a couple decades,,, starting way back in the 1950s era,,, really quite the same thing today, in spite of the continuing degradation of our money…

      • Bobby Dents says:

        Lol, capitalism is a ponzi scheme. SS, not so much. Scientism=debt expansion fooled you.

      • Macro Investor says:

        Not only is there nothing to fear, but you have it BACKWARDS. Countries in much worse shape like japan, the UK and the EU (except for germany) will slide downward and default much sooner. As they do, scared money will rush to the dollar and US stocks/bonds.

        You need to stop listening to scare stories put out by the gold-selling sites. Obviously, if you could buy treasuries at an even 1% discount you’d be a billionaire in no time.

        • MiTurn says:

          Can you really separate out Germany?

        • Thomas Roberts says:

          Macro Investor,

          The EU could thrive by itself quite easily, the problem with the EU was that for decades, the UK was a Trojan horse who intentionally undermined the EU, trapping into a transitory state were it has to become either more or less integrated. The EU has to move in one of those 2 directions, the UK prevented it from becoming more unified, in order to exploiit it. Now that the UK is out, the EU has a much better chance of success of being a major unified global economy. But, because, of all the problems that it has experienced, which left a bad taste for the EU in many mouths. There is a real possibility it could collapse, however, what nobody seems to understand is that if it did collapse, a new smaller more unified EU could result. The French, German, Dutch, possibly the Nordic countries and others could be a part of this new block (France and Germany will be the first countries to join, most likely, and they alone would be a major start).

          It’s also important to remember that most of the EU countries are doing quite well, and overall better than America, everything considered. It’s mainly a couple of notable exceptions like Greece that give it the bad name. Spain and Italy pre-CCP-19 were incurring a lot of debt, but, not that notably terrible. The Euro may collapse (If the EU breaks up), but, the economies underneath most member states are quite strong. As for their current debt loads, every significant economic country in the world (except Russia) has a ton of debt and they aren’t any different. Also, I think that the world has run out of worthwhile investments and that as a result, those with large savings have to risk quite a lot of their money or will soon have to keep their money safer in negative interest rate national bonds, when stable governments fully switch to paying out negative interest rates, the debt burden will be less significant. Germany has already started the trend, but, it will have to take off first.

        • Thomas Roberts says:

          The US will probably do just fine as well, but, considering that Greece had no reason to do poorly, but it did anyway (it’s own sheer incompetence), anything could happen (America could succeed, but, it’s own incompetence or not, will determine it’s future).

          If the EU did break up, many of the countries not invited into the new EU, might form their own, in some cases link up with Russia, go Solo, or just do terribly.

        • Thomas Roberts says:

          I keep forgetting stuff.

          All the stock markets will probably crash hugely, but, after the alternatives to stash money fail as well, over time, the stock market in America, Japan, Europe, and others will start to climb possibly even higher than before, but, could become turbulent, making safe negative interest rate national bonds becoming one source of savings.

        • Lee says:

          Thomas:

          In the world right now are a whole bunch of problems. Some of them are health. Some of them ar.e financial. Some of them are political. Some are demographic

          The EU has all four right now: health, financial, political, and demographic.

          China has a financial problem and soon to have a demographic problem.

          Japan is Japan and is already having their demographic problem. Their financial problem is theirs alone.

          The USA is a special situation with temp problems that may be able to be solved – we’ll know in a couple of months. They are right now transitory unlike the structural EU problems.

          Of all the areas in the world, China has the biggest financial problems, the EU has the biggest overall problems, and the USA has biggest temp problems.

          The EU is overall the biggest basket case in the world.

        • nick kelly says:

          From the viewpoint of Japan and the UK, Japan especially, the US looks like a place on the verge of civil war. Chicago just used used its swing bridges like castle moat bridges to fend off a mob. Dozens gunned down every night sometimes including kids. A populace scrambling for ammo and assault rifles.

          Japan with a hundred million plus pop, in one recent year, had ZERO gun murders. Check their trade surplus, or a drive way nearby. .
          Americans have no need to worry about Japan.

          The question is whether the reverse is true.

    • Jeremy Wolff says:

      But as long as the world can produce enough goods and services for society to function we are fine. Money/debt is just a way to distribute those goods and services. The money and debt is less important than the actual work being done. As long as work is being done then there can be a system found to distribute the wealth. Dollars can be replaced by something else. Some suffering will occur but it doesn’t have to be long or terrible.

      • rhodium says:

        That’s one of my big peeves about people’s notions of economics. Every time someone says we consume more than we produce that may be true in a trade deficit sense, but on the aggregate it makes zero sense. You can’t consume something that hasn’t been first produced so in the real goods and services economy if people are still producing, then someone gets to consume. Barring a wild supply chain collapse or something, there’s no reason that production can’t continue and therefore consumption as well. Money is just a relative measure of your share of the production pie. Divide all value created by money spent and you get some total price. Money is irrelevant from a real value perspective, and debt is just a claim on money. What it all boils down to is that any which way you look at it, there are the haves and have nots when it comes to both money and real assets. Whether the money people are paid for the supposed value they produce actually matches the value they produce is another issue.

        • Saltcreep says:

          I find that if we use the term ‘extract’ instead of ‘produce’, then it illuminates our real problem more. We can extract more and more from our environment, but by doing so we make the enjoyable future shorter and shorter. The massively growing leverage has permitted us to accelerate our rate of extraction very far beyond sustainable levels. And the rebalancing will be a nasty process indeed.

      • Kurtismayfield says:

        Right now money/debt is being used as a political tool. It is being used to inflate assets and lower the purchasing power of labor. Houses have doubled in price the last four years in my area.. do you think my wages kept up? If I didn’t purchase this current residence then I would have to work twice as long for the same living conditions.

        The same thing goes for Health insurance, food, and education costs. I have to work harder and harder just to keep up.

        This is an intentional political decision by the people in control. They have wanted to weaken US labors purchasing power since the 1970’s, and they have almost succeeded in doing it.

    • paul easton says:

      Everyone says just print more money and water down the debt. Even a relatively serene 20% inflation drops the value by a factor of 6 in 10 years. So why expect an implosion? A panic? What would that look like?

      • paul easton says:

        So maybe the markets crash because no one can estimate inflation risk. So you can’t sell stock or get credit. So why can’t you just use your income for any financial needs?

    • cb says:

      I’m trying to think your post through. I do agree it appears to be a ponzi scheme, or at least a scheme to try and skim productivity and assets to the FED/banker/wall street class.

      I also recognize that most Americans have found themselves in a situation where they had much more debt than money to pay that debt off with – hence, the 30 year mortgage.

      So can a situation be escaped where there is more debt than dollars?
      Why not?

    • cb says:

      @ Marc 60 –

      I’m trying to think your post through. I do agree it appears to be a ponzi scheme, or at least a scheme to try and skim productivity and assets to the FED/banker/wall street class.

      I also recognize that most Americans have found themselves in a situation where they had much more debt than money to pay that debt off with – hence, the 30 year mortgage.

      So can a situation be escaped where there is more debt than dollars?
      Why not?

    • Lisa_Hooker says:

      Do not conflate cash money, which is a stock, with debt repayments, which are a flow. A very important distinction.

  5. Eric says:

    I got some silver in change in 1968. thought to inlay it in a sporting rifle i built .
    Over the years added to my pile.
    A week ago my little stash increased over $ 100,000,00 in USD.
    Not bad for a fella who spent two years in the ninth grade.

    • Paulo says:

      Good comment Eric,

      One of the smartest employer I ever worked for had a grade 8 education. He owned his own airline and did just fine. My father in law, who just died, managed grade 7 due to WW2 and the blitz. He was a self taught artist, sculptor, and was very secure with his investments.

      Honest hard work and savings still works today. Many people are just impatient and look for a magic score or formula, imho. I follow V vets advice up above. The honest ant wins every time as far as I’m concerned. :-)

      • Lisa_Hooker says:

        Paulo, a major problem is that since WWII the ratio of ants to grasshoppers has changed dramatically. The ants are now way outnumbered.

        • VintageVNvet says:

          Correct Lisa, but it started with the first major mechanization of farming in the 1930s, and then was exacerbated after WW2 by the continuing efficiencies on the farms and factories as a result of the engineering advances by USA industry during that war. Henry J Kaiser was a genius who figured out how to launch one ship a day PER LINE at the yards in SF Bay, as just one example.
          While it used to take, literally, hundreds of humans to harvest a thousand acres of almost anything, when that crop was ready to be harvested, today, except for high end produce as is grown in the Salinas Valley, machines, very very expensive machines to be sure, can harvest, sometimes on a contract basis, many thousands of acres per day, then move on to the next farmer.
          I watched a couple of likely $500K+ harvesting machines go across a couple thousand acres in TX recently; the dozen or so semi trailers they were loading could not keep up. (Bad estimating of semis needed.)
          Guy visiting his daughter, my housemate, couple years ago, blew my mind when he told me he was adjusting feed balances for about 10K milk and ”feeder” cows about 200 miles away on his laptop while chatting away. (He and the mom thought this old grandpa was a Guardian Angel who showed up to take care of their daughter until she and her (live in) boyfriend were married, a notion of which I did not disabuse them, LOL)

  6. Say It Aint So says:

    The story remains the same…the dates are now 2020 instead of 2009-2010…everyone consistently raged about the level of debt that the Fed has taken on and that the US was going to go broke…but the performance of equities in the last 10 years has proven that the Fed can pretty much do whatever it wants, unchecked, and the stock market will continue to rise…no one has been able to predict what or when this bubble will explode? The Fed was purchasing Repo’s in Sept 2019 which really keep the bubble alive…and the virus was but a small blip which gave rise to the Fed pumping trillions into the global economy which included their own purchases of stocks and bonds…what will be the straw?

    • rankinfile says:

      When the banks go down this time the public will not stand bailouts.
      TARP saved the banks last time and the banks put 20 million people out of their homes.Ironically Eric Holder,a black Attorney General chose not to prosecute so much as 1 banker.He has been rewarded with a nice position on Wall Street. HOPE AND CHANGE BABY,CAN YA SPARE SOME?

      • Chillbro says:

        Mr. Holder returned to his old law firm which is located in DC.

      • Yertrippin says:

        Ugh. Yea the black guy. As if corrupt politicians who move to Wall Street need to be identified by color. Grow up.

      • Lynn says:

        People will be put out of their homes in a different way today. House prices in much of the country have gone up 20% since the virus. When PPP and unemployment run out many will be at the mercy of the banks again. Those who rent have had a very difficult time paying rent or even finding a place since before 2008.

        Every time housing real estate goes up there is some percentage of people who become newly homeless. In some urban areas rent has gone down, but not by very much, and certainly not enough for the majority of people. The average income is offset by very high incomes. The majority of people in the US make less than the average income.

        • Lynn says:

          We need to slow the flow of foreign money buying our housing stock. It’s not the entire problem, but it would help a lot. Foreign money tends to keep the properties and not sell them, rents them out less often, and each year the total percentage probably grows. The US should care enough about it’s citizens to enable them to afford a roof over their head and a toilet and not have to use the street.

        • Saltcreep says:

          Lynn, the best way to slow that is by balancing trade. A trade deficit automatically results in a capital account surplus as an equivalent inbound capital stream results, as foreigners must necessarily accumulate US assets in order to balance the trade.

    • Pete Koziar says:

      Once upon a time, a guy fell off the Empire State Building. He pulled out his cell phone, called his wife and said, “Just passed the 70th floor and still going great.”

      The straw, I think, is inflation in real goods. The Fed can keep printing until then, but once the inflation genie is out of the lamp, it’s hard to stuff back in thanks to the wage-price spiral. While inflation is confined to financials, there’s no positive feedback loop since the money isn’t getting out into the real economy.

      Equities aren’t real money until you sell them.

  7. historicus says:

    Wolf…
    it seems there is a game behind the scenes going on…..some are privy to…
    and we are left to guess.
    Central Banking answers to no one.

  8. Old School says:

    I was going over my dad’s modest coin collection. Even the 1965 coins after the big removal of silver content are worth 10 times face value.

    • MiTurn says:

      Look at pre-1982 pennies, where their value in copper exceeds the face value. But more importantly, this debasement of currency reminds me of the Roman Empire, which didn’t work out too well.

      Of course today is completely different…

      • Bobby Dents says:

        Actually the debasement worked on and off, including Nero’s which created a economic boom. It wasn’t until Christianity derived slaves and territories started hammering the empire after 210 that problems started. Currency “debasement” was a natural conclusion to a fading empire. Maybe you should read history and understand it better.

  9. MiTurn says:

    “Debt out the wazoo”

    This can’t end well, but it will do so suddenly.

    I’m doubling my garden space next year. What else can I do? Buy gold? Yeah, I’ll use French francs to do that…

    :)

  10. want to retire says:

    Here in slc I know three people buying houses now around half a million give or take. Few properties in sl county under 400.000 worth living in and none with any land, so they have to move 40 miles away. I live where it was consider the sticks 20 years ago and there are a lot developments being finished and filled, I will be watching very closely for new ground being broken after the new year and to see if it goes unfinished

    • Zantetsu says:

      Not many people call Salt Lake City “slc” except people who live there I guess. My recommendation is that you spell it out in future because you keep confusing people.

  11. want to retire says:

    Maybe should have posted on previous article, oops

  12. sierra7 says:

    FED: “Funeral Reserve”

  13. A says:

    I’ve never been clear on the logic of buying bonds that yield less than inflation. Seems like a fool’s racket to me.

    • Just Some Random Guy says:

      For those with no risk tolerance losing 1-2% a year due to inflation is worth not taking any risks on losing more.

    • Lisa_Hooker says:

      When no one will do laundry you look for the cleanest shirt.

  14. Duane says:

    Carlyle Group alumnus Jerome Powell on March 26, 2020, “there is nothing fundamentally wrong with our economy”.
    By “economy” I think he means “stock market”. Market downturns are “passe” and will no longer be tolerated. Better to torch the dollar and make everyone pay more.

    • Just Some Random Guy says:

      I interviewed with Carlyle Group and was offered a position once upon a time. But I didn’t want to move to DC. Probably an unwise move looking back on it. I didn’t understand just what that place was and how many powerful people are alums. Young and stupid was I. Oh well…..

  15. If anything derails this market it will be a loss of confidence in the Fed to communicate it’s policies. One good slip, or one late night tweet can undo things. Secondary to that the Fed may change direction, according to their implied jawboning, without telling anyone. They may hang out the ‘gone fishing’ sign and let rates find their own level.

    • Paulo says:

      There could be some mayem induced upheaval after Nov 3rd. Real disruption. Or big covid spikes in September as a result of ___________. That would knock the stuffing out of everything. Jerome can stick his finger in to plug the leaks but it won’t stop a rout. The ammo is all gone along with trust.

      • Bobby Dents says:

        It’s already began. The economy is slowing to standstill.

      • VintageVNvet says:

        With you on the events Paulo, and although Nov 3 will indeed be
        ”A moment of reckoning” no matter which of the current putative pres candidates wins,, at this point it is clear that both sides will do their damnest to cause trouble, perhaps even big trouble.
        Not only are the so called parties miles and miles apart, but they continue to sow discord in all their fans (AKA Fanatics, eh) to the detriment of all of WE the Peedons, no matter what side of the aisle we may prefer.
        Based on what seen so far, September will be too early for the so called second wave of this virus event,,, that wave will likely be later in the fall and then especially in the dead of winter, Jan-Feb prox.
        Then and only then, perhaps into late winter or early spring will we see the whole enchilada…
        Keep your powder dry,,, it may be useful for a ton of good buys,,, and might be needed for some good byes too if the covidiots keep on with their denials and refusals, etc.

  16. nick kelly says:

    ‘Over the 12-month period, the Fed added $2.1 trillion in Treasuries…’

    So the quick answer to who was the biggest buyer of US govt debt is…the US govt. If the govt wants to have one office labelled Treasury and another labelled Fed isn’t it still the buyer.

    • Any bond they issue the buyer is implied. Bonds are scrip. You would not want to use money to buy scrip unless you are using another form of scrip. Money became a shadow of itself when the BIS settled with China in T bonds instead of dollars. Bernanke called that “sterilization” while it repressed the inflationary tendency of the currency in a trade deficit. The Chinese holder of dollars could not redeem them, but could exchange them for other script. The ratio of scrip to dollars is periodically adjusted by call-ins. Last call-in was 2008. Call-ins are made after black market operations, (speculation) threatens the value of the old scrip. Fed may not monetize this old scrip if new scrip is about to be issued, which is probably the case here.

    • Bobby Dents says:

      Not quite right. The Fed is not the US government. It’s the banks.

    • cb says:

      @ nick kelly –

      No. The FED is private and gets to collect interest on the dollars it creates to “buy” the Treasuries that the Treasury creates.

  17. Just Some Random Guy says:

    OK I will come clean. I bought it all.

  18. Social Nationalist says:

    Sorry, but there is NO INFLATION AS THE RESERVE CURRENCY. Period, glibertarians, stop it. It shows your ignorance. Its when other countries stop using dollars, the US credit system will crash. That is the key.

    Its abusing reserve currency status with little benefit to trading partners that starts the decay. Most likely China will move against the US and that will be it. A global panic will endue, much as the US knew in 1929-33 period had crippled the pound. The dollar would be crippled as capital flees. Credit contraction creating a depression which the FED could do nothing about.

    This is part of the Putin/Trump show as they want a piece of the “new currency”. Which is the real non-News Speak “trade negotiations” are really are about.

    • Lee says:

      Social Nationalist says:

      “Most likely China will move against the US and that will be it.”

      Yes, for China.

  19. mike says:

    How about the unknown buyer of US treasuries being the Exchange Stabilization Fund? This hyper secret government agency is where the majority of the missing 21 trillion dollars ended up. That is a lot of money set aside for nefarious purposes..

  20. Engin-ear says:

    Maybe something should be mentioned about Treasuries triple-A credit ratings and how legally necessary the safe commercial papers are in the institutional investment portfolios.

    • Wisdom Seeker says:

      US Treasuries may be only AA or AA+, depending on the rating agency. Fitch is among the last holdouts at AAA, and a few weeks ago they put US on negative watch suggesting a downgrade is imminent.

    • Wisdom Seeker says:

      And “legally necessary” is only until the laws are changed. Calvinball Rules apply in any crisis.

  21. Michael Engel says:

    1) IEI, 3-7 years UST Bond ETF made a jump in Feb/ Mar 2020 and is
    still moving up.
    2) TLT, UST > 20 years Bond ETF made a jump in Feb/ Mar 2020 and
    in a trading range, waiting for action.
    3) The value of US gov debt is rising.
    4) USD Future DX monthly hit a support line from May 2011(L) to May
    2014(L). DX LT trading range is : 80.60 from Feb 1991(L) to 98.23 from
    July 1991(H). If DX breach support gold and WTI will popup. If not…
    5) US gov debt = $23.22T / Fed assets = $4.32T / US gov saving account
    in the Fed = $1.67 // the total ==> $25.87T.
    6) SPX made a new all time high. It’s an upthrust. If might be a failed UT and SPX will move higher.
    7) There are x2 Bearish Divergence on SPX daily : Aug 10 & 12, a strong signal, and Aug 10 & 18. If SPX will cont higher, the 2nd Bearish Divergence will be cancelled.
    8) QQQ made a new all time high, on lower volume. QQQ daily Bearish Divergence : Aug 10 & 18, medium signal.
    9) Bearish Divergence can send QQQ to support, in a correction, before moving further up, or a start of more serious troubles.
    10) QQQ & SPX monthly RSI are still bullish. / IWM & NYA monthly RSI are
    in bearish territory.
    11) A major correction will send SPX monthly RSI to bearish territory.

    • Zantetsu says:

      Michael Engel! You are back! We were worried about you with the Covid and disappearing like that and all.

    • sunny129 says:

      IEI (3-7 yr -yield 1.64%) total return ytd = 6.9%
      IEF (7-10 yr – yield 1.57%) total return ytd = 11.16%
      IG bonds LQD (etf) yield 3.03% “” “” “” = 7.63%

      Both HYG & JNK ( yield around 5.0%+) ” = Neg – 4.2% each

  22. Yort says:

    $1,000,000,000,000 (1 Trillion) would take 2739.7 years to spend at a spending rate of $1,000,000 (1 Million) per day. Do the math, the number is so large that humans do not have the capacity to comprehend or even understand the lunacy of the situation. Grab a calculator, enter “1” followed by “12” zeros. Then divide by 365,000,000 ($1,000,000 per day times 365 days per a single year). The result is 2739.7 years to spend $1,000,000,000,000!!!

    Another thought experiment on how humans have limited ability to comprehend gigantic numbers. If you lay 1 Trillion $1 bills end to end (length wise), it would wrap around the Earth 387 times (It would be a 96,906,656 mile long (M)agic (M)oney (T)rain….choo choo, everyone loves trains, right???).

    Last thought experiment, 1 trillion $1 bills stacked vertical would stack 68,000 miles high!!! For reference, 68,000 miles is 1/3 (33%) of the distance from Earth’s surface to the moon.

    Folks, this is bonkers, no different than a child cheating at monopoly, and this will not work forever without unintended consequences. The future will be very different from the past, so invest wisely with a realization that the rules have changed and thus the game of life will likely not return to a previous “normal” state for at least one generation, if not longer. Yet perhaps we get a few years or decades of monetary bliss…TBD…

    • OutsideTheBox says:

      Isn’t it great that the U.S. government can pay it back over 4 or 5 centuries ?

      I mean it is, afterall, an immortal being.

      • MonkeyBusiness says:

        Immortal? It’s only been around for a while. Compare it to the Chinese. 5000 years of continuous culture. We are kids compared to them.

        Some writers from the US predicted that one day this country will blow apart, and even California will be split into two republics.

        I think the possibility of that happening is very real. I’ve been reading a couple of blogs from the conservative side, and basically the attitude is : if the liberals want to leave, then yeah, let them go, just leave us alone. Don’t dictate how we live.

        • OutsideTheBox says:

          So you’re saying the end is nigh and the country isn’t going to be around ?

          Then the debt NEVER has to be paid !

          See, no worries.

        • roddy6667 says:

          How will this be accomplished? Many states are about 50/50. Why do the people on the right get to stay? Why don’t they leave instead of trying to dictate how the other half lives?
          The last election showed that the country is basically divided right down the middle, left vs. right.

        • MonkeyBusiness says:

          I didn’t say the end is nigh. The end will be a process. I certainly hope this country will not end up as Brazil with nukes.

          And no, the debt will not be paid no matter what. That time is long past.

          The country is divided between left and right, true, but California is mostly left, and Texas is mostly right. That’s just an example. Some lefts will get to stay and the same’s true for rights. Florida will provide the rights access to the sea, so it’s not as if they’ll be surrounded on both sides by the liberals.

          Anyway, I find it alarming that there’s discussions out there about what will happen in a Civil War, etc.

        • OutsideTheBox says:

          MB

          You know….The U.S. throughout its entire history has ALWAYS been extremely divided by ideology.

          If one truly knows the history of the good ole USA one knows this is as old as the republic.

          And most rabid ideologues are just barking dogs.

          But those newfangled internets think this is NEW…..nope

        • VintageVNvet says:

          Don’t know where you’re getting the idea that the folks on the right are anything these days but ”reactionary,” MB, as they are certainly not any kind of conservative by my definition.
          Same for the folks on the left, just a bunch of reactionaries on the other extreme, and IMHO, THAT is exactly the conundrum we find ourselves in as a nation today; both sides running for the extremes and to heck with the center/moderates who had been fairly successful for the previous couple of centuries, working out what would be done cooperatively, as opposed to what could possibly be done, but was unlikely.
          ”Clean House, Senate Too” AKA voting OUT every incumbent who will not do the work needed to help We the Peedons appears to me to be the only way we are going to proceed peacefully to any kind of stable situation again. Otherwise, we will be seeing tons more ”blood in the streets” making the riots of the last few weeks seem small potatoes…

        • MonkeyBusiness says:

          In the past we didn’t have Twitter, Facebook, all the crap that our “smart” engineers came up with. Toilet wall at scale, basically.

          Our current toilet wall technologies sharpen our differences in ways that are just impossible in the past. It also allows people that would have a hard time banding together in the past to find each other. I mean just take a look at the QAnon stuff.

          As I said, I pray everyday that the worst will not come to past.

        • Stephen Cavaliere says:

          How many currencies has China created and destroyed in 5,000 years?

        • OutsideTheBox says:

          MB

          Toilet wall at scale.

          That is a terrific description !

          I completely agree.

        • MonkeyBusiness says:

          @Stephen Cavaliere, does it matter? The point is there’s enough “glue” in their society to keep people together. The United States on the other hand came out of a bunch of Europeans who could not stand other Europeans.

          Also, the amount of money including US Dollars nowadays probably dwarves the amount of money printed in the past in their entirety.

    • MonkeyBusiness says:

      It just has to work long enough till Powell is no longer around. After that, it’s really Other People’s Problem.

  23. Robert says:

    Although I am not a big bond guy, supposedly as the US dollar weakens US Treasuries become more appealing. So by that metric, the US should have no problem finding buyers for its debt.

    Of course the appeal of treasuries also depends on whether we’re heading for more disinflation vs potential inflation. Is the Fed powerful enough to prevent any rise in treasury yields?

  24. Scott Duncan says:

    Who gives a crap about China. China is a communist cesspool. What nobody wants to mention is like Cuba and many other socialist, communist countries had to use some form of capitalism with external world trade to survive and grow. If they did not, they would be just like North Korea.

    Look at all the countries, majority of the world keep owing and increasing their U.S. government debt holding. China is not the be all end all of what they keep trying to make it for decades now. They are way above their heads as being touted as the next superpower. They will just be a big brutal by force world bully with financial disasters in coming years, decades.

    Anybody or any one that supports and wants China to lead the world is a straight out communist, marxist, socialist disguising themselves as capitalists. They are not capitalists.

    If the left, democrats and others turn the US closer to China like communist,marxist, socialist state from the new green deal to UBI to taxing the productive and businesses to death than China looks great. It is easy to look great when you have no realSDc better alternative.

    • Wolf Richter says:

      Scott Duncan,

      You could have saved yourself some work by reading the article, rather than just the headline 😎

    • Tony22 says:

      Scott, I hate Commies and Marxists, especially in our S.F. city government, but you know what? I wouldn’t mind some Cuban style healthcare, free at the point of service and better quality than the majority of Americans get, especially for what they pay for it.

      If we had that, I doubt the pandemic would be hitting us like it is.

      Meanwhile, start mentioning Josh Hawley’s name for president in 2024. He’s the conservative from Missouri who argued the Hobby Lobby case and won, who hates big tech and is a patriot. Really young too, so ample room for a second term.

      • Happy1 says:

        You want Cuban style healthcare but are willing to overlook a complete lack of freedom of expression and can live with being arrested for speaking your mind and tortured and beaten? Do you even know someone from Cuba? Perhaps you should spend some time there. Last I checked people were still trying to escape from there. Call me back when people are floating from Florida to Cuba.

        • VintageVNvet says:

          Not sure it is still happening, but when at CAL in late sixties, there was a free clinic on Bancroft that was better than the free hospital for students at CAL, both in terms of time and service, and competence above all.
          FREE as in no charge for anything they could do,,, and, of course it’s only honest to say all the wonderful Nurses and MDs were young folks who valued their service in Karma,,, and I really and truly hope that paid off for them,,, though they likely to be in the cohort of Doctors Without Borders these days, eh
          Cuba OTOH is still a mess, despite the attempts by the various castros and clones to do better for their people,,,, they did so clearly in the beginning,,, but, then, debauched into the usual, to the vast disappointment of many people who had been to Cuba under Batista and knew it for a sorry place politically, in spite of the wonderful spirit of the Peedons who were SO gracious to so many of us gringos.

        • OutsideTheBox says:

          H1

          Literal minded aren’t you ?

          And missing his point entirely.

        • cb says:

          @ Happy1 –

          Take the best, discard the rest!

          I’ve never been to Cuba. Have you?

          That free speech is quite an issue. No free speech in many Western countries on certain subjects. Censorship here in America. Express the wrong opinion in America and you may find yourself on the wrong side of a physical beatdown or a targeted cancel culture victim, and it’s dubious as to where your rights fall as to police or judicial protection.

    • topcat says:

      “They will just be a big brutal by force world bully with financial disasters in coming years, decades.”
      Coming from an american this is either hypocricy or ignorance, I think you need to look at modern US history in a little more detail. The US rules the world in the same was as the Romans ruled the world and the British ruled the world, primarily by force and after that by controlling the word’s currency.

    • zagonostra says:

      I don’t fear the “Communist” I fear my own government. There is enough internal tyranny and brutalization by our pristine Capitalism to have to worry about or fear “Communist.” How many foreign bases does China have compared to the U.S.?

      Just finished reading Jack London’s “The People of the Abyss.” You should download it for free on Librovox to learn a bit about the wonders of Capitalism. And yes, Capitalism is the worst possible economic system except for all the rest, but I’ll be damned if I let it off the hook for its inhumanity.

    • roddy6667 says:

      You sound like you are stuck in 1956, reading your Cold War propaganda handouts in your bomb shelter. I’ll bet that you have never been to China. I wonder where you got all that “information”.

  25. Wisdom Seeker says:

    Would love to see the final chart graphed as relative shares – percentage of the total debt at each time – to see which shares have been trending up vs. down, out of the total issuance at each stage. There’s tantalizing commentary in the text, and I think a figure like that could spawn another good article.

    China is definitely trending down. Given the ongoing icy relations, is that significant?

    Looks like US banks & investors are trending up. Love to see more about who’s loading up on these low-risk/low-return “safe haven” assets and why?

  26. Tony22 says:

    Your fourth chart,
    “U.S. Government Debt, by Holder category”

    “Trillions?” Do you mean Billions?
    Or, are those just extra zeros?

    i.e.

    $26,000 Trillion is the total outstanding?

    Once again, You Are The Man for U.S. economic reporting. Must have referred hundreds to your site.

  27. simon yoosen says:

    Majority of the treasury are scooped up by US entities and FED in the recent year. Why FED has to scoop up? Is it because of no buyers? Those individuals and US entities purchased the treasuries even with non existence yield mainly to speculate in the bond bull run. Once the whole episode collapse, perhaps FED will stand in to prop up the price. So, end game is the FED, who buy everything.

    • historicus says:

      The Fed finds themselves the only buyers at their manufactured fake rates.
      A snake eating its own tail.

  28. George W says:

    The “debt ceiling” was a good thing and needs to be restored.

    The “deficit Hawk’s” will eventually limp back onto the stage. Unfortunately, during the Trump years, the “Hawk’s” have revealed themselves to be nothing more than “scarecrows”. So much of their credibility has been lost.

    Using Government funds such as Social Security, to fund treasury issuance’s during a pandemic/crisis is likely a necessary evil.

    Unfortunately, the crisis is now the norm. The treasury is relying on Govt. funds to support its ever expanding balance sheet. Long term, all Govt. funds require a much larger return than the treasury can ever hope to offer. Something has to give, I say this as the dollar continues to lose value.

    • Happy1 says:

      This is the greatest disappointment of the Republican party. The massive increase in spending the last 4 years is inexcusable. If you cut taxes you have to cut spending even more.

      • OutsideTheBox says:

        No no no…..

        Again you have it backwards.

        Increase taxes while increasing spending.

        Fixed it for you.

    • Lisa_Hooker says:

      The Treasury only offers a quantity with no “return” attached, it then accepts purchase offers from the market, as the FRB manages the “market” rate. Once upon a time, long ago, there was a real market in treasuries.

  29. kam says:

    @ Wisdom

    China wants, desperately needs U.S. dollars to keep buying, propping up the Yuan.

    What’s worse than a Central Bank in a purported Democracy? A Central Bank controlled by a corrupt Dictatorship that fooled itself into offering the peasants hope.

    Great Expectations are a dangerous thing.

    • Lisa_Hooker says:

      The Chinese are stuck with accepting dollars for their stuff, as the US doesn’t want to bid up the yuan in the open market in order to pay in yuan. And the US complains the yuan is overvalued. The Chinese may as well buy US treasuries, it’s some yield however small. Meanwhile the US keeps buying their stuff.

    • MonkeyBusiness says:

      China does not want to prop up the Yuan. They tried to devalue back in the day (2015) and got hit with “currency manipulator” accusations.

      If you let them the Yuan will probably be 10 to 1 or even lower.

      This thing about China wanting the Yuan to be revalued higher is a myth. So far, they’ve been doing to stay off the Treasury list, not because they want to.

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