Treasury debt is held in trust for retirement. If the U. As the nation's central bank, the Federal Reserve is in charge of the country's credit. It doesn't have a financial reason to own Treasury notes. So why does it? Between and , the Federal Reserve actually tripled its holdings. The Fed needed to fight the financial crisis, so in , it ramped up open market operations by purchasing bank-owned mortgage-backed securities.
In , the Fed began adding U. This quantitative easing QE stimulated the economy by keeping interest rates low and infusing liquidity into the capital markets, giving businesses continued access to low-cost borrowing for operations and expansion.
The Fed purchased Treasurys from its member banks, using credit that it created out of thin air. It had the same effect as printing money. By keeping interest rates low, the Fed helped the government avoid the high-interest-rate penalty it would incur for excessive debt.
The Fed ended quantitative easing in October As a result, interest rates on the benchmark year Treasury note rose from a year low of 1. But just a few years later, it purchased Treasurys again. Treasurys, making it the largest foreign holder of the national debt.
Both Japan and China want to keep the value of the dollar higher than the value of their currencies. That helps keep their exports to the U. Despite China's occasional threats to sell its holdings, both countries are happy to be the biggest foreign holders of U. Its holdings have increased in rank as Brexit continues to weaken its economy.
So while many people believe that much of the U. This means U. Hilarey is an associate editorial director for The Balance and has held full-time and freelance roles at a variety of financial media companies including realtor. Department of the Treasury. Federal Reserve Bank of St. Accessed Oct. Board of Governors of the Federal Reserve System.
Federal Reserve Board of Governors. Congressional Research Service. Securities: Implications for the U. Actively scan device characteristics for identification.
Bad as that number is, using the bald total figure is not as representative as using a measure which compares the debt to the size of the economy. That is, debt as a percentage of gross domestic product - GDP. Treasury marketable and non-marketable bills, bonds, and notes reported under the Treasury International Capital TIC reporting system are based on annual Surveys of Foreign Holdings of U.
Securities and on monthly data. Beginning with new series for June , also includes British Virgin Islands. Data journalism and data visualisations from the Guardian. Interactive: 4 Oct Presidential debate: which words did the candidates use? Interactive: 1 Oct Afghanistan casualties and deaths by US state: mapped and data. Turn autoplay off Turn autoplay on. Jump to content [s] Jump to comments [c] Jump to site navigation [0] Jump to search [4] Terms and conditions [8]. For China , it's the safest, best investment the growing nation can make.
China's economic growth is fueled partly by the return on their U. Poisoning the dollar would take the yuan right down with it [source: Capaccio ]. We've been talking a lot about America's debt problem, but how does U.
The most useful debt measurement is to calculate the ratio of public debt to gross domestic product GDP. At the end of , U. And while was the year the COVID pandemic ruined economies around the globe, that figure wasn't a huge anomaly, as it was Although a How can the Japanese economy support such a lopsided debt-to-earnings ratio? It turns out that Japan's debt, while incredibly high, is not unsustainable.
The Japanese economy is still very strong. It boasts the world's third-largest GDP, and unemployment was a mere 2. The country is also heavily invested in U. But the biggest difference between Japanese and American debt is that Japanese citizens own 90 percent of their country's debt, with only 10 percent in the hands of foreigners.
In contrast, more than 40 percent of U. The country the United States is most indebted to is As of December , here are some of the domestic investors who owned U. Treasury Securities [source: U. Department of the Treasury ]:. Why would individual Americans, businesses and local governments continue to loan money to the United States?
Believe it or not, investing in the government isn't a high-risk proposition. While the federal government is hemorrhaging thousands of dollars by the second in order to pay interest on its debts, the U.
America's credit rating would drop, and the booming market for U. How would the U. Let's hope we never find out. Sign up for our Newsletter! Mobile Newsletter banner close. Mobile Newsletter chat close. Mobile Newsletter chat dots. Mobile Newsletter chat avatar. Mobile Newsletter chat subscribe. Political Issues. Top 10 Countries the U. Owes Money To. A jumble of street signs in a Taiwan street. Taiwan gets most of its income from trade and, as a hedge against the hard times, it invests in U.
The flower carpet at the Grande-Place, Belgium. Despite its small size, Belgium's reputation as an international banking center means lots of financial transactions reside here. A glimpse of the Sao Paulo city center. Brazil is the world's ninth largest economy.
Despite its small physical size, Switzerland manages more financial assets than any other country. Tiny, picturesque Luxembourg is also a big buyer of U. People enjoy afternoon drinks outside a pub in the center of Dublin, Ireland. A Shanghai skyline at dusk. China is the U. A Japanese girl smiles in a Tokyo city street. Japan is America's largest foreign creditor. Fireworks fly over the Jefferson Memorial on the Fourth of July.
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