Who owns America? Hint: It's not China(globalpublicsquare.blogs.cnn.com)
globalpublicsquare.blogs.cnn.com
Who owns America? Hint: It's not China
http://globalpublicsquare.blogs.cnn.com/2011/07/21/who-owns-america-hint-its-not-china/
13 comments
Well, they're the largest non-US-govt owner, including $150B more than US households. I'm not sure the Treasury and Social Security Trust count as far as external influencers, so China is still at the top of the pile, despite only owning 8%.
Given the current debt ceiling situation, I think it's more likely this breakdown is being presented as an answer to the question "who suffers if we default?" rather than "how reliant are we on external influences?"
Here's a treemap visualization of U.S. debt holders, based on data from this article:
http://coding.pressbin.com/110/Treemap-shows-who-holds-US-de...
http://coding.pressbin.com/110/Treemap-shows-who-holds-US-de...
Quibbles...
A good portion of titles are cut-off.
As has been pointed out, it's doubtful the US treasury itself counts as being in the same category as US house-holds (the US treasury prints the money it uses to buy US debt, that's hold money gets printed).
A good portion of titles are cut-off.
As has been pointed out, it's doubtful the US treasury itself counts as being in the same category as US house-holds (the US treasury prints the money it uses to buy US debt, that's hold money gets printed).
It's interesting how close Japan is to China too, given how people aren't fretting about Japan.
> "given how people aren't fretting about Japan."
They aren't fretting about Japan anymore. But in the 1980s there was an anti-japan screed equivalent for just about anything you read today about China.
With regards to economics anyway.
They aren't fretting about Japan anymore. But in the 1980s there was an anti-japan screed equivalent for just about anything you read today about China.
With regards to economics anyway.
There is a fun Michael Crichton book (and a subsequent movie) that captures the "fretting" quite well IMHO. It's called Rising Sun.
Somewhere in the book boxes I have an autographed copy of that book which he sent me as lagniappe along with a check as payment for a little Mac shareware program I had then.
Don't forget about the 80's flick, Gung Ho, where a Japanese Company takes over an American Car plant.
http://en.wikipedia.org/wiki/Gung_Ho_(film)
What is interesting to me is how much those two countries are themselves in debt. Everyone knows about Japan but China has quite a mess to deal with too: http://tinyurl.com/3upnavb
Please don't use URL shorteners. It is considered bad form on HN where we don't have a 140 character limit. We want to know where we are going before we go.
karma-whoring: http://www.economist.com/node/18775343
Perhaps because Japan is an ally. Even if that were to change and the Japanese government became less aligned with US politically, Japan would still not be a threat militarily.
> The U.S. Treasury: $1.63 trillion (11.3 percent)
How can the Treasury have US Debt?
How can the Treasury have US Debt?
Good question. The Treasury controls numerous trust and pension funds that are heavily invested in US Bonds.
See http://en.wikipedia.org/wiki/File:Holders_of_the_National_De...
See http://en.wikipedia.org/wiki/File:Holders_of_the_National_De...
[deleted]
I went to the "source" slideshow, and I still can't tell how much these categories overlap. Part of my 401K is invested in a strictly-U.S. Treasury Bonds mutual fund. Does that count as owned by a household or by a mutual fund or get counted twice?
[Edit: I didn't read far enough in the source: the linked article misstated "Federal Reserve" as "Treasury"] Also, how does the U.S. Treasury "own" the debt? I thought Treasury issued the debt, and the Federal reserve controlled (more exactly "influenced") the interest rate by deciding how much of those bonds to buy. So I expected the Federal Reserve should have shown up as a large debt holder.
[Edit: I didn't read far enough in the source: the linked article misstated "Federal Reserve" as "Treasury"] Also, how does the U.S. Treasury "own" the debt? I thought Treasury issued the debt, and the Federal reserve controlled (more exactly "influenced") the interest rate by deciding how much of those bonds to buy. So I expected the Federal Reserve should have shown up as a large debt holder.
I found it amusing that Caribbean Banking Centres own so much of the debt. Didn't realise there was that much capital there.
Is the "U.S. Treasury" here the Federal Government, or the Federal Reserve?
It is unclear by your comment whether you are aware that the Federal Reserve is a private organization, and is not part of the US government. Or, perhaps that is your point?
That is rather disingenuous. While the Fed can make decisions outside the purview of the government, its power is derived from Congress, and its governors are appointed by the President and confirmed by Congress. It's certainly not an entirely private organization.
Please excuse my ignorance. I thought I knew something, and I was apparently mistaken. Several aspects taken from the wikipedia entry[1] stuck out for me:
The Federal Reserve System's structure is composed of the presidentially appointed Board of Governors (or Federal Reserve Board), the Federal Open Market Committee (FOMC), twelve regional Federal Reserve Banks located in major cities throughout the nation, numerous privately owned U.S. member banks and various advisory councils.[
The Federal Reserve System has both private and public components, and was designed to serve the interests of both the general public and private bankers.
It is also unusual in that an entity outside of the central bank, namely the United States Department of the Treasury, creates the currency used.
However, its authority is derived from the U.S. Congress and is subject to congressional oversight. Additionally, the members of the Board of Governors, including its chairman and vice-chairman, are chosen by the President and confirmed by Congress. The government also exercises some control over the Federal Reserve by appointing and setting the salaries of the system's highest-level employees. Thus the Federal Reserve has both private and public aspects.
Various statutory changes, including the Federal Reserve Transparency Act, have been proposed to broaden the scope of the audits. Bloomberg L.P. News brought a lawsuit against the Board of Governors of the Federal Reserve System to force the Board to reveal the identities of firms for which it has provided guarantees.[140] Bloomberg, L.P. won at the trial court level,[141] and as of early September 2010 the case is on appeal at the United States Court of Appeals for the Second Circuit.
[1]http://en.wikipedia.org/wiki/Federal_Reserve
The Federal Reserve System's structure is composed of the presidentially appointed Board of Governors (or Federal Reserve Board), the Federal Open Market Committee (FOMC), twelve regional Federal Reserve Banks located in major cities throughout the nation, numerous privately owned U.S. member banks and various advisory councils.[
The Federal Reserve System has both private and public components, and was designed to serve the interests of both the general public and private bankers.
It is also unusual in that an entity outside of the central bank, namely the United States Department of the Treasury, creates the currency used.
However, its authority is derived from the U.S. Congress and is subject to congressional oversight. Additionally, the members of the Board of Governors, including its chairman and vice-chairman, are chosen by the President and confirmed by Congress. The government also exercises some control over the Federal Reserve by appointing and setting the salaries of the system's highest-level employees. Thus the Federal Reserve has both private and public aspects.
Various statutory changes, including the Federal Reserve Transparency Act, have been proposed to broaden the scope of the audits. Bloomberg L.P. News brought a lawsuit against the Board of Governors of the Federal Reserve System to force the Board to reveal the identities of firms for which it has provided guarantees.[140] Bloomberg, L.P. won at the trial court level,[141] and as of early September 2010 the case is on appeal at the United States Court of Appeals for the Second Circuit.
[1]http://en.wikipedia.org/wiki/Federal_Reserve
Where does the President get the list of potential members to appoint to the Board?
How can the Fed make a loan to the unqualified wives of Morgan Stanley executives with zero-risk to them without repercussion if they are so well controlled?
How can the Fed make a loan to the unqualified wives of Morgan Stanley executives with zero-risk to them without repercussion if they are so well controlled?
I'm literally trying to figure out if the item listed here are asserts the Federal Reserve acquired (through quantitative easing), or asserts the Federal Government acquired (as part of the federal budget). The latter is debt that is repaid. The former most definitely isn't. Unless the Federal Reserve will simply hold on to those assets forever.
Hmm,
The two biggest treasury bond holder are agencies of the government. Which essentially is money that's been printed rather than debt.
The third largest holder of the debt is China. China plus Japan have more than US house holds.
The banks, mutual funds, etc. could themselves be owned by anyone, so I don't those figures saying much.
So, as far as I can, the figures seem to say foreigners own a huge amount of US debt. Of course, this "bonds in America", not "stock in America" so they don't have any option to remove the "board of directors". Still, given how the current management is doing, I almost they could.
The two biggest treasury bond holder are agencies of the government. Which essentially is money that's been printed rather than debt.
The third largest holder of the debt is China. China plus Japan have more than US house holds.
The banks, mutual funds, etc. could themselves be owned by anyone, so I don't those figures saying much.
So, as far as I can, the figures seem to say foreigners own a huge amount of US debt. Of course, this "bonds in America", not "stock in America" so they don't have any option to remove the "board of directors". Still, given how the current management is doing, I almost they could.
Wrong. Seniors owns America.
Social security liability: 15 Trillion
Prescription drug liability: 20 Trillion
Medicare liability: 79 Trillion
US unfunded liabilities: 114 Trillion
http://www.usdebtclock.org/
Social security liability: 15 Trillion
Prescription drug liability: 20 Trillion
Medicare liability: 79 Trillion
US unfunded liabilities: 114 Trillion
http://www.usdebtclock.org/
But again (as I said below and was completely unfairly downvoted) we have no way to raise that much money to pay the seniors. Because Tax revenue tends to stay consistent as a % of GDP(http://tinyurl.com/3dgkupq) even when the top tax rate is raised to 80 or 90% (which it was in the 50s).
So the person who really owns America is whoever is going to lend us the money to pay the seniors (and those becoming seniors) in the next 30 or so years.
(And yes I'm prepared to be Downvoted here too but I'd rather be downvoted while trying to get people to face an obvious truth than hide from a bully with a quick mouse finger)
So the person who really owns America is whoever is going to lend us the money to pay the seniors (and those becoming seniors) in the next 30 or so years.
(And yes I'm prepared to be Downvoted here too but I'd rather be downvoted while trying to get people to face an obvious truth than hide from a bully with a quick mouse finger)
You won't be downvoted because what you say is true. It's going to be very challenging to pay for all of these entitlement programs.
We've essentially outsourced to the government what for millennia has been taken care of by families- caring for our seniors and elderly. If we want to have a sustainable path forward, this is something that we as a society will eventually have to confront, come to terms with, and hopefully solve.
We've essentially outsourced to the government what for millennia has been taken care of by families- caring for our seniors and elderly. If we want to have a sustainable path forward, this is something that we as a society will eventually have to confront, come to terms with, and hopefully solve.
Did you read your own chart? Between 1942 and today, it ranges from ~14% to ~21%. I don't know if you're aware of this, but 7% of GDP is a big deal. Incidentally, the same chart you point to shows how tax income is about as low of a share of GDP as its ever been since 1950.
I've seen the same point made elsewhere, and the point isn't really that tax revenue stays constant as a % of GDP, it's that there seems to be a ceiling around 20%. The implication being that attempts to raise tax revenue greater than 20% of GDP are likely to fail.
And the people implying this are usually anti-government nuts.
The fact is tax increases of any kind are currently hard to get. Maybe as benefits for seniors start disappearing we'll see that change since seniors vote. If we ever get back to 20% of GDP for Federal tax revenues there's no special reasoning that says getting to 21% is going to be any harder then going from 18% to 19%. The whole 20% thing is just silly.
The fact is tax increases of any kind are currently hard to get. Maybe as benefits for seniors start disappearing we'll see that change since seniors vote. If we ever get back to 20% of GDP for Federal tax revenues there's no special reasoning that says getting to 21% is going to be any harder then going from 18% to 19%. The whole 20% thing is just silly.
Did you see the chart? That's what the empirical data shows. Tax avoidance behavior increases as tax rates increase, you have moving targets.
"Did you see the chart? That's what the empirical data shows."
It doesn't show any such thing. The whole truth is that from 1940 to 2000 average taxes paid including state and local went from 18% to 32%. Plenty of governments around the world and a number of US states are over 20% in federal taxes alone.
"Tax avoidance behavior increases as tax rates increase, you have moving targets."
This is obvious but, unfortunately, does not get you to "it's impossible to collect more then 20% federal taxes"
It doesn't show any such thing. The whole truth is that from 1940 to 2000 average taxes paid including state and local went from 18% to 32%. Plenty of governments around the world and a number of US states are over 20% in federal taxes alone.
"Tax avoidance behavior increases as tax rates increase, you have moving targets."
This is obvious but, unfortunately, does not get you to "it's impossible to collect more then 20% federal taxes"
The seniors will get less than they expect, and that's the sad truth of it.
You assume we have to pay the seniors.
Social security and medicare are both insurance funds. You pay in now to get benefits later.
The current generation of seniors going into retirement spent all their retirement before they retired. They elected the politicians who bankrupted social security through generous tax cuts and costly wars.
The solution isn't an end to social security. The solution is a temporary reduction in benefits for the baby boomers.
That would be fiscal responsibility.
Social security and medicare are both insurance funds. You pay in now to get benefits later.
The current generation of seniors going into retirement spent all their retirement before they retired. They elected the politicians who bankrupted social security through generous tax cuts and costly wars.
The solution isn't an end to social security. The solution is a temporary reduction in benefits for the baby boomers.
That would be fiscal responsibility.
[deleted]
For those fellow readers with a distaste for obfuscated links:
http://www.businessinsider.com/government-tax-receipts-by-so...
I down-voted you here because this is a dupe of what you just posted lower down in this very thread.
So, 'the people who live in the US' own America?
Considering the ridiculous prices for health care in the US, we could easily knock 50 trillion off that by just sending all those seniors to Canada for health care. Or perhaps reforming our health care system to not charge 3x as much for worse services than are available in more civilized countries? I think someone tried that, but the people who plan to pocket most of that $99 trillion weren't happy at all about the prospect.
Considering the ridiculous prices for health care in the US, we could easily knock 50 trillion off that by just sending all those seniors to Canada for health care. Or perhaps reforming our health care system to not charge 3x as much for worse services than are available in more civilized countries? I think someone tried that, but the people who plan to pocket most of that $99 trillion weren't happy at all about the prospect.
If the concepts of queuing theory and attrition are familiar to you, then you won't be surprised at the efficiency of Canadian health care. Providing fewer services is cheaper, and the resultant long queues (months, sometimes years) results automatically in fewer critically ill people left to serve, and hence more savings.
I've lost multiple loved ones to precisely this "feature", and have gained a sister that almost certainly would have died in the queue -- because she happened to be studying in the US when she fell ill.
I think I personally prefer the risk, and choice, presented by a medical system with (expensive) oversupply.
I've lost multiple loved ones to precisely this "feature", and have gained a sister that almost certainly would have died in the queue -- because she happened to be studying in the US when she fell ill.
I think I personally prefer the risk, and choice, presented by a medical system with (expensive) oversupply.
I've been self employed for my entire adult life, and have not seen a doctor since I was under 18, which was a long time ago. I can't afford insurance, which is very expensive when you're not part of some large pool, and by the same token, can't afford retail, a la carte health care, which is extremely expensive if you don't have insurance (to the tune of 5-30 times as much as insurers pay for a service).
I'd take waiting months or years over a choice between no health care or extensive debt/bankruptcy.
If I was in the country illegally, or had no assets or desire for future credit, I could go to an emergency room and receive plenty of services without a need to pay a cent. As a law abiding, legal citizen with moderate assets, my options are very limited in the US. In all directions regarding healthcare, there is an absurd subsystem seemingly designed to require that one works for a large corporation which provides health benefits.
I'd take waiting months or years over a choice between no health care or extensive debt/bankruptcy.
If I was in the country illegally, or had no assets or desire for future credit, I could go to an emergency room and receive plenty of services without a need to pay a cent. As a law abiding, legal citizen with moderate assets, my options are very limited in the US. In all directions regarding healthcare, there is an absurd subsystem seemingly designed to require that one works for a large corporation which provides health benefits.
".. If I was in the country illegally, or had no assets or desire for future credit, I could go to an emergency room and receive plenty of service.."
That is simply not true. When was the last time you've been in the emergency room?
Unless you are close to death, private hospitals won't even treat you. They ship you off to the closest public hospital. Where, if you don't have the money you are the last seen. And in South Florida that can take days, depending on how busy the hospital is. And you get the minimal care to keep you alive. Period. Not to mention, the local governments pay for it. Trust me, public hospitals don't give services out of the goodness of their hearts. It's a terrible situation I know. But the solutions (universal health care) haven't work out so well.
That is simply not true. When was the last time you've been in the emergency room?
Unless you are close to death, private hospitals won't even treat you. They ship you off to the closest public hospital. Where, if you don't have the money you are the last seen. And in South Florida that can take days, depending on how busy the hospital is. And you get the minimal care to keep you alive. Period. Not to mention, the local governments pay for it. Trust me, public hospitals don't give services out of the goodness of their hearts. It's a terrible situation I know. But the solutions (universal health care) haven't work out so well.
True, it depends on the state. Either way, people with much lower incomes (or paper trails) than people like me have better care, and people with higher incomes have much better care. As far as receiving health care in the US, being self employed at about 25-60k a year seems to be a particularly bad position.
Its never good to lose a loved one, and i am sorry for your loss - but i have never experienced this issue my 30 years in Canada. im very surprised that you have had "multiple" loved ones die due to "queuing theory and attrition". From time to time there is a story in the media about someone dying in the waiting room with a burst appendix, but those are rare, and i am sure happen in the USA just as often (if not more so in the public facilities).
some points to back up what i say: -my grandfather was diagnosed with colon cancer last year. they caught it early, and the next week he was undergoing treatment.
-i was diagnosed with a rare eye condition. within a week i was in the specialists office.
-i was in a car accident. it was fairly minor, but they insisted i stay in overnight for observation. i had cat scan, x-ray, etc as soon as possible
-me and my wife have had 3 kids. we never had any delays seeing a doctor, all were born healthy, and every one of them sees a doctor on a regular basis without long delays.
some points to back up what i say: -my grandfather was diagnosed with colon cancer last year. they caught it early, and the next week he was undergoing treatment.
-i was diagnosed with a rare eye condition. within a week i was in the specialists office.
-i was in a car accident. it was fairly minor, but they insisted i stay in overnight for observation. i had cat scan, x-ray, etc as soon as possible
-me and my wife have had 3 kids. we never had any delays seeing a doctor, all were born healthy, and every one of them sees a doctor on a regular basis without long delays.
Sorry, when one part of a government "owes" another part money, the only meaning is political rather than economic.
As far "unfunded liabilities" liabilities go, that's another politically-motivated relabeling.
The US will spend more on military spending than social security next year, just as it did last year and intends to do ten years from now. But social security is called an "unfunded liability" and military isn't. Guess why?
As far "unfunded liabilities" liabilities go, that's another politically-motivated relabeling.
The US will spend more on military spending than social security next year, just as it did last year and intends to do ten years from now. But social security is called an "unfunded liability" and military isn't. Guess why?
Source for the military spending? Wikipedia says otherwise http://en.wikipedia.org/wiki/2010_United_States_federal_budg...
I'd look it up but it's orthogonal to main my argument. Defense and Social Security are roughly equivalent expenses but one counts 100% as an "unfunded liability" and the other count 0% as such.
[deleted]
8% might not "own" us, but its enough to "pwn" us.
Here's some nice commentary about the reality of the debt limit: http://ftalphaville.ft.com/blog/2011/06/22/602761/the-imposs...
Many point out that, even if the government "shuts down", we have enough to pay the interest on all our debt, so we don't have to worry about default. But that completely ignores maturing treasury bills. In order for us not to be up shit creek, we need China, Japan, Wall Street, HK to rollover these bonds (i.e use the money we owe on them to buy more).
Most of this debt is short term (less than two years). What happens to our economy if China decides not to rollover $1T over that time? Or starts selling it? If it doesn't end with everyone else throwing in the towel, it will at least end with huge interest rates. The only thing stopping the US becoming 1930's Germany is the Chinese. It's nice that we have all the other requirements in place: Father^H^H^H^Hhomeland Security, Christian Fundamentalists, huge military, secret police, massive jails.
Here's some nice commentary about the reality of the debt limit: http://ftalphaville.ft.com/blog/2011/06/22/602761/the-imposs...
Many point out that, even if the government "shuts down", we have enough to pay the interest on all our debt, so we don't have to worry about default. But that completely ignores maturing treasury bills. In order for us not to be up shit creek, we need China, Japan, Wall Street, HK to rollover these bonds (i.e use the money we owe on them to buy more).
Most of this debt is short term (less than two years). What happens to our economy if China decides not to rollover $1T over that time? Or starts selling it? If it doesn't end with everyone else throwing in the towel, it will at least end with huge interest rates. The only thing stopping the US becoming 1930's Germany is the Chinese. It's nice that we have all the other requirements in place: Father^H^H^H^Hhomeland Security, Christian Fundamentalists, huge military, secret police, massive jails.
Nobody owns America. Dumb title.
Who's America ?
The problem with this assessment is a large part of our debt is owed to a shell game.
Raising taxes has proven ineffective when it comes to generating large amounts of revenue. Look at history and tax revenue as a % of GDP remains remarkably steady despite the top tax rate falling almost 70%(http://tinyurl.com/3dgkupq). So the old saying that you can't raise taxes higher than the amount it would cost a rich guy to cheat the tax system holds pretty true.
Maybe we'll find some miraculous way to fix that problem but as of right now we can't expect huge gains by raising taxes.
That means the roughly 43% we owe ourselves either (a) can't be paid back or (b) will have to be borrowed from foreign countries. Because we can't raise the revenue in time to pay out the debt to pension funds, Social Security and private citizens saving for retirement.
So the People/Government who owns America is really whoever will be willing and able to loan us money when the U.S. citizens we owe come to collect their money.
Raising taxes has proven ineffective when it comes to generating large amounts of revenue. Look at history and tax revenue as a % of GDP remains remarkably steady despite the top tax rate falling almost 70%(http://tinyurl.com/3dgkupq). So the old saying that you can't raise taxes higher than the amount it would cost a rich guy to cheat the tax system holds pretty true.
Maybe we'll find some miraculous way to fix that problem but as of right now we can't expect huge gains by raising taxes.
That means the roughly 43% we owe ourselves either (a) can't be paid back or (b) will have to be borrowed from foreign countries. Because we can't raise the revenue in time to pay out the debt to pension funds, Social Security and private citizens saving for retirement.
So the People/Government who owns America is really whoever will be willing and able to loan us money when the U.S. citizens we owe come to collect their money.
Did you read your own chart? It clearly shows that tax revenues as a percentage of GDP vary a lot. Between 1942 and today, it ranges from ~14% to ~21%. I don't know if you're aware of this, but 7% of GDP represents over a trillion dollars. Incidentally, the same chart you point to shows how tax income is about as low of a share of GDP as it's been since 1950.
Being able to produce additional revenues of 1 or 2% from an economy of trillions is not my measure of ineffective tax increases.
It is when your debt is approaching 100% of your GDP and you owe 40% of it to yourself. Think about it. If GDP and our Debt are roughly equal how is 1 or 2% a year increase in revenue going to be able to pay 40% + interest of debt?
10 year Treasury interest rate: 3%
interest on 40% of GDP: 1.2% of GDP
QED.
interest on 40% of GDP: 1.2% of GDP
QED.
If you owe money to yourself why can you not write that debt off?
Self = same economic system/country. Or would you have America writing off loans from American citizens?
Unless spending also rises by 1-2% of GDP.
http://reason.com/archives/2011/02/14/the-19-percent-solutio...
http://reason.com/archives/2011/02/14/the-19-percent-solutio...
By that logic, when China comes to claim its debt, whoever we borrow from then to pay off China is who owns the US. Since ultimately we're going to pay it off (maybe in decades, but eventually), we're always the last in line and thus the "owner". No, we have to look at who we owe money to now and assume we won't be able to pay it off. The game is too circular otherwise.