Wednesday, August 10, 2011

Who Owns United States Debt?

The Australian economist Bill Mitchell has been following data sets to analyze US debt and who owns it and, as of March 2011, the largest owner of US debt is the US government, which owns 41.7% (including the FED which is not an actual government agency but a private bank authorized by Congress) of its own debt.  China is third at 8% behind private domestic owners at 26.9%.  He also provides in the link above not only a pie chart, but a succinct macroeconomic explanation of sovereign debt and how it is not like a household (you and me) or a city, county, or other form of regional government (such as the State of Illinois) which are revenue constrained but have a guaranteed revenue stream (unlike you and me) in taxes and fees which make it easier for them to borrow.  Since sovereign debt is not the same as household debt macroeconomically, it is very counter intuitive for most people no matter how educated they are.  Consequently, there is much useless discussion in public debate from individuals on both sides of the political abyss who do not understand what they are talking about.

Mitchell also has come unrelated comments at the end on the UK social unrest including the belief that it would be possible to forecast social unrest  by mapping the failure of governments to provide services, good education, and jobs.

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