I'm still trying to figure out why the government is subsidizing those who work such as those in the defense industries. Those in oil, pharmaceuticals, electronics, various manufacturers, housing, and banking etc.
I am still trying to figure out why there are people who think there are people who don't want to work!
I am still trying to figure out why people don't read and learn that Europe which has tried the austerity programs and are having no growth is a policy being advocated by folks such as Blurryeyed.
I see no problem with the national debt. We owe the vast majority of the debt to ourselves.
Who Owns the U.S. National Debt?
By Kimberly Amadeo, About.com Guide
It would take 160 billion $100-bills to pay off the U.S. debt.
Question: Who Owns the U.S. National Debt?
Answer: The U.S. debt is more than $16 trillion. The U.S. has been able to run up such a huge debt because it always has the ability to pay it off by auctioning off more Treasury notes.
However, there is a debt ceiling set by Congress. Whenever the debt approaches this ceiling, legislators raise concerns about the ability of the U.S. to pay back its debt. It's of special concern now that the debt-to-GDP ratio has passed 100%. This means that the U.S. debt is larger than its entire economy produces in a year. Even though it's still unlikely, those who own U.S. debt have become increasingly concerned that perhaps the U.S. will default on its debt.
Most of the news headlines focus on how much the U.S. owes China. And, in fact, China is the largest foreign owner of U.S. debt. However, the biggest single owner is ... you. Why? Because the single largest holder of national debt is the Social Security Trust Fund, aka your retirement money. Here's how it works.
The Debt Is in Two Categories
The U.S. Treasury manages the U.S. debt (among other things) through its Bureau of the Public Debt. The Bureau has broken out the debt into two main categories: Intragovernmental Holdings ($4.9 trillion) and Debt Held by the Public ($11.6 trillion).
Intragovernmental Holdings - Just under one-third of the Federal debt is owed to about 230 other Federal agencies. How does this happen? Some agencies, like the Social Security Trust Fund, take in more revenue from taxes than they need right now. Rather than stick this cash under a giant mattress, these agencies buy U.S. Treasuries with it.
Which agencies own the most Treasuries? Social Security, by a long shot. Here's the detailed breakdown:
Social Security (Social Security Trust Fund and Federal Disability Insurance Trust Fund) - $2.72 trillion
Office of Personnel Management (Federal Employees Retirement, Life Insurance, Hospital Insurance Trust Funds, including Postal Service Fund) - $1.12 trillion
Dept. of Health and Human Services (Federal Supplementary Medical Insurance Trust Fund) - $69 billion
Federal Deposit Insurance Corporation - $35 billion
Department of Transportation (Airport and Highway Trust Fund) - $20 billion
Department of the Treasury (Exchange Stabilization Fund) - $23 billion
Department of Labor (Unemployment Trust Fund) - $21 billion
Other Programs and Funds - $933 billion. (As of September 2012. Source: Treasury Bulletin, Monthly Treasury Statement, Table FD-3:Government Account Series)
Debt Held by the Public - Foreign governments and investors hold 48% of the nation's public debt. The next largest part (21%) is held by other governmental entities, like the Federal Reserve and state and local governments. Fifteen percent is held by mutual funds, private pension funds, savings bonds or individual Treasury notes. The rest (16%) is held by businesses, like banks, and insurance companies and a mish-mash of trusts, businesses and investors. Here's the breakout:
Foreign - $5.311 trillion
Federal Reserve - $1.66 trillion
State and Local Government, including their pension funds - $709.1 billion
Mutual Funds - $864.9 billion
Private Pension Funds - $605.2 billion
Banks - $305.2 billion
Insurance Companies - $259.1 billion
U.S. Savings Bonds - $184.7 billion
Other (individuals, government-sponsored enterprises, brokers and dealers, bank personal trusts and estates, corporate and non-corporate businesses, and other investors) - $1.14 trillion. (Federal Reserve as of Januray 2, 2013; All others as of June 2012. Source: Treasury Bulletin, Ownership of Federal Securities, Table OFS-2)
This debt is not only Treasury bills, notes, and bonds but also TIPS, Savings Bonds, and State and Local Government Series securities.
As you can see, if you add up debt held by Social Security, and all the retirement and pension funds, a large part of the U.S. Treasury debt (30%) is held in trust for people's retirements. If theoretically the U.S. were to default, foreign investors would be angry, but the greatest harm would befall the average U.S. citizen.
Why Does the Federal Reserve Own Treasury Debt?
As the nation's central bank, the Federal Reserve is in charge of the country's credit, so it really doesn't have a financial reason to own Treasury notes. So why did it double its holdings between 2007 and 2012? This is one way the Fed stimulated the economy to escape the grips of the 2009 recession. The Fed's purchases stoked demand for Treasuries, which kept interest rates low.
The Fed's been criticized for simply monetizing the debt. This means because the Fed can create credit out of thin air, which is like printing money. It's as if the Treasuries bought by the Fed didn't exist.However, once the economy recovers, the Fed can get reimbursed by Treasury and take the debt off its balance sheet.
What About Foreign Ownership of the Debt?
The breakout of foreign-held debt shows that China was the largest holder, at $1.161 trillion (as of October 2012, most recent data). Japan came in second, at $1.134 trillion. The oil exporting countries have been increasing their holdings, and have edged up to become #3 at at $266 billion. The Caribbean Banking Centers have also increased their holdings in recent years, and are now fourth, holding $258 billion. The Bureau of International Settlements has stated that the Caribbean centers, Luxembourg (at $139 billion) and Belgium ($133 billion) are probably fronts for oil-exporting countries and hedge funds that don't want to reveal their positions. Brazil is the fifth largest holder, at $255 billion. The next largest holders are Taiwan, Switzerland, Russia, Hong Kong and the United Kingdom, holding between $117-$201 billion each. (Source: Foreign Holding of U.S. Treasury Securities, December 17 2012; U.S. Treasury report Petrodollars and Global Imbalances, February 2006)
China has been decreased its holdings from $1.2565 trillion in the last year, perhaps out of concern that the U.S. will default on its debt. China wants to keep the value of the dollar high. This makes its own currency, the yuan, relatively cheaper by comparison. That helps China's exports to the U.S. seem more affordable, which helps its economy grow. That's why, despite China's occasional threats to sell its holdings, it's happy to be America's biggest banker, and largest owner of U.S. debt. Article updated January 8, 2013
http://useconomy.about.com/od/monetarypolicy/f/Who-Owns-US-National-Debt.htm