Who owns the US National Debt (Explained)
Many people think that US is such a rich country. It gives financial assistance to world but truth is US is biggest borrower of world.
US have debt of 31 Trillion Dollar ($31,458,034,662,625.50) that is 121% of their GDP
There is debt of $94,188 on every American that is around Rs 75 lacs
Compare it with India
India have debt of 610 Billion Dollar that is only 19% of our GDP
Every Indian have debt of 437 USD that is around Rs 40K that is among lowest in the world
Now lets come back to USA
how they come in such a high debt ?
US govt issue treasury bonds/notes, securities
Any investor can buy those treasuries, US pays interest on those treasuries
And US govt use that money (received from selling treasury) on Public welfare
Its same like India
Suppose Karnataka govt made huge promised to public to win election but they don’t have money
- They need suppose Rs 10,000 crore
- Then they will take debt from open market
- An investor will give them Rs 10,000 cr
- In return they will give fixed interest on EMI
- And will use that Rs 10,000 crore to fulfil promise
- Its very safe way coz Political leaders don’t need to pay back that debt. These debt r from 20-30 years n they know they will be in power for 5 years max
- CM after 20 years or public will pay this debt
Now lets come back again to US
US have 31.4 T $ loan this 31.4 T can be classified in 2 categories
- Intragovernmental holdings ($ 6.87T)
- debt held by the public ($ 24.5T)
Intragovrnment holding means : Loan between 2 depts of govt
Why would govt owe money to itself ?
Let me answer
Because some agencies, like the Social Security Trust Fund, take more revenue from taxes than they need. These agencies then invest in U.S. Treasurys.
They redeem their Treasury notes for funds as needed.
Now lets come to second one that is debt held by Public
Debt by Public includes
- – Federal reserve (Yes U read it right, fed reserve is not govt bank, Its Pvt institute)
- – Foreign Governments
- – Mutual fund companies
- – Insurance companies
- – Depository funds
- – Others
Here is the break up of 24.5 Trillion
So u can see biggest one is
- Federal Reserve : around 8.8 Tril
- Then foreign govts : 7.5 Tril
- Mutual fund companies 2.84
Other holders of the public debt include insurance companies, U.S. savings bonds, private pension funds, and other holders, including individuals etc
If I add debt held by Social Security and all the retirement and pension funds, almost half of the U.S. Treasury debt is held in trust for retirement.
Current and future retirees would be hurt the most if the U.S. ever defaulted on its debt.
Now most interesting part of Thread
Why the Federal Reserve Owns Treasurys ?
As the nation’s central bank, 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?
Fed says they buy it to increase liquidity in market but interesting question is not why Fed gives debt to US govt
imp is how it gives
Answer is- it prints money for US
Yes a Pvt agency controlled by Deep State prints money for US n from that printed money they buy US T bond
and earns interest on them.
If u have understood it now u can feel surprised
That’s why I say Fed Reserve is heart of DS
Now among Foreign countries, Japan and China own highest debt of US
Both Japan and China want to keep the value of the dollar higher than the value of their own currencies. This helps to keep their exports to the U.S. affordable, which helps their economies grow that’s why they buy US Treasury
Now at the End
U.S. national debt is the sum of public debt that is held by other countries, Federal Reserve, mutual funds,intragov holdings held by Social Security, Retirement Fund, Medicare, and other retirement funds
Now brain twister
half of debt is owed to Social Security, pension funds right here in the U.S.
This means U.S. citizens own most of national debt that they have to pay.
Thread by Starboy2079