By Mathew Carr
April 16-29, 2024 — Watch the video:
Once people know about how the US is funded on debt rather than on taxes, they may quickly sell Treasuries, (Bukele says) … that may lower the price of Treasuries, boosting interest rates …and forcing the USA to issue more debt in a vicious spiral to pay interest on the increasing debt and surging rates.
The US may need to boost taxes quickly.
President of El Salvador, Nayib Bukele
He’s not the only one saying things like this:
This from Hector Birchwood, an El Salvadorian born economist based in London:
“To be fair, Bukele is being disingenuous in the way he frames the issue of confidence, because the institutions & governments that hold US debt know the risks associated with it, even as it spirals out of fiscal sustainability; because the debt is not just backed by US taxpayers & the economic engine of that country, but by the US military – the most powerful military on the planet. The military industrial complex that supports US hegemony is both a large part of the debt problem and also, the very pillar holding up the value of that debt. It’s quite the Faustian pact.”
–Interesting post below…ignore the headline/lead about Federal Reserve rolling into the Treasury, which is not accurate, I understand.
Here is some data that puts El Salvador’s comments in perspective (sorry some of it is not more recent).
Bukele is right … the US government accounts and the Federal Reserve (as a group) is the biggest holder by far
Other countries owning US Treasuries would be impacted if American debt becomes rapidly out of favor, Birchwood said.
The following does not include US holders
SIFMA data for the US:
US fixed income surges from SIFMA
By soaking up the cash and using its global economic dominance to manipulate markets for the benefit of the US and its already-rich citizens, America leaves less capacity to drag the rest of the world into a more wealthy status. That is, if it’s buying US debt, by definition it’s not using that money to buy debt issued by a less-rich nation, say, India. There is an element of zero sum in these decisions.
All countries need money for climate action, for instance.
From Google gemini:
There isn’t a single definitive source to tell you exactly how much of the issued US Treasury securities are held within the US, but here are some resources that can help you get a good idea:
- U.S. Treasury Monthly Statement of the Public Debt (MSPD): This report by the Department of the Treasury categorizes the debt by whether it’s held by the public or government agencies. It doesn’t distinguish between domestic and foreign holders within the “public” category, but it provides a good starting point https://fiscaldata.treasury.gov/.
- US Treasury Securities Statistics – SIFMA: This resource by the Securities Industry and Financial Markets Association (SIFMA) doesn’t provide a specific breakdown by holder location either, but it offers insights on total issuance and outstanding debt https://www.sifma.org/resources/research/us-treasury-securities-statistics/.
- Major foreign holders of treasury securities U.S. 2024 – Statista: This can give you an idea of the amount held by foreign countries, which helps you estimate the amount likely held domestically https://www.statista.com/chart/13329/major-foreign-holders-of-us-treasury-securities/.
(Corrects to clarify headline, lead of the 2nd instagram link was inaccurate; earlier added context and links)
[…] — Arnaud Bertrand (@RnaudBertrand) May 3, 2024 The US is a Ponzi scheme to make rich people wealthier and suppress the rest: Bukele + Birchwood (5) […]