At dinner recently, I re-heard the famous “$19 trillion of debt” story as a sign of the end times. Interestingly, that figure is now out of date. At the end of 2016, according to the St Louis Federal Reserve (the keeper of this data), America’s Public Debt was sitting at about $19.98 trillion. If we’re going to round that, it’s now $20 trillion. And more importantly, we’re four months into 2017. So with the planned bond issues for 2017, we’re already there.
The breakdown of America’s Public Debt
By the end of 2017, the US National Debt is expected to be $20.1 trillion. The forecasted breakdown for 2017:
- $5.39 trillion is owned by the US government (that is: the US government ‘owns’ some of its own debt, by holding reserves for Social Security, Medicare, etc).
- $2.46 trillion is owned by the Federal Reserve (ie. all those securities that it purchased during Quantitative Easing).
- $12.3 trillion is owned by investors, banks, foreign countries, etc.
Then of that $12.3 trillion, only about $6 trillion is owned by foreigners:
Some of those, like the Cayman Islanders, are almost certain to include the investments of the foundations and trusts of the American elite. That is: I’m pretty sure we’d have to class some of the ‘foreign-owned’ debt as American-owned.
Then, there is reciprocity, as demonstrated by this excellent infographic (courtesy of Visual Capitalist):
Should we panic?
There are a number of things that I keep pointing out during these dinner time conversations:
- Whenever we’re talking about debt, you have to talk about the assets as well. And the American government has a lot of assets. For example, the value of oil reserves on state-owned land in America alone is worth quite a bit more than double the national debt.
- Also, we have to think about the owners of the debt here. My bet: many owners of US government bonds never really expect to cash them in. So if you’re not expecting to repay most of the debt, then is it really a problem?
If you’re interested in longer versions of those points, check out these posts:
Just some dinner-conversation thoughts.
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