I don’t have much to comment about this article. The reason for this post is to simply mark a level of debt to foreign entities the US has. I’ve done this a couple of times, and will continue to do so, periodically. There are so many misconceptions about the foreign holdings of our debt, I think, from time to time, it’s worthwhile to simply put the truth out there.
Don’t get me wrong, our debt in general is alarming. It signifies a horrible negligence of duty in both the congress and the presidency. Not only the current branches, the negligence of duty has gone on for years.
And, the level of foreign holdings of our debt is unacceptable. Indeed, I believe it should not be allowed. But, it isn’t as bad as many people believe and are led to believe.
So, there’s this …….
WASHINGTON (AP) — Foreign holdings of U.S. Treasury securities fell in May for a second straight month even though China, the largest foreign owner of Treasury debt, boosted its holdings.
In its monthly report, the Treasury Department said Thursday that total holdings edged down 0.1 percent in May to $6.13 trillion after a bigger 0.6 percent decline in April.
China boosted its holdings by 0.5 percent to $1.27 trillion in May, but Japan, the second biggest foreign owner of Treasury debt, trimmed its holdings 0.1 percent to $1.21 trillion.
The demand for U.S. Treasury securities, considered one of the world’s safest investments, is expected to remain strong this year.
Much of the debt is owned by foreign central banks. The holdings by foreign governments rose 0.7 percent in May to $4.16 trillion, 68 percent of the total foreign holdings.
Well, “safest” …..
This is something which doesn’t make a lot of sense to me. And, because it doesn’t make a lot of sense, it causes me to believe we’re being gamed.
Is the US bond one of the world’s safest investments? Well, for now, yes, probably. But, how safe does one have to be before being considered a “safe” investment? To be sure, I’d probably stay away from a Euro bond ….. even though it’s probably considered fairly safe, today. But, what of a Canadian bond? Is it any less safe than a US bond? What of the British bonds? Australia’s? Or, even China’s? None of these nations are going anywhere anytime soon (relatively speaking). Swiss? The chances of any of these nations defaulting on their issued bonds within the next, say, ten years or so, are somewhere between nil and zero. And, if any of them do, it means that just about everyone else will be defaulting, as well.
So, why buy a US bond? We pay almost nothing in interest for it. Even if you’re a central bank, why buy a bond you’re certain that inflation will eat the value more than the interest it’s going to pay? Essentially, people are paying the US to hold our debt. That doesn’t make any sense! Japan? Well, maybe I understand that a bit. But, why would China?
Now, that said, I haven’t recently looked into the interest some of the above mentioned nations pay for their bonds, but, I can’t imagine them being lower than the US bonds, because the US bonds are the saferest!!!!!
There are other nations not mentioned which are deemed pretty safe, too. …… what’s the game, here? It doesn’t make any sense.
Note: Total federal US debt stands at $18.3 trillion.