Friday, June 5, 2009

Almost a third of US government debt held by foreigners

The US government is becoming increasingly dependent on foreigners to finance its growing deficit. Currently, foreign investors hold over $3.3 trillion of US government bonds, representing about 30 percent of the outstanding stock.

As of March 31, 2009, the US government debt stock stood at $11.1 trillion. Over the last 12 months, it has increased by $1.7 trillion.

Of course, this can not continue for ever. At some point, foreign investors are going to wake up and realize that US fiscal policy is unsustainable. When that happens, there will be a run on US treasuries. When it happens, it will make the recent financial crisis look like a garden tea party.

3 comments:

  1. The US economy is being run by clowns. Foreigners are in control and the ones that get out first in the coming months will have the last laugh.

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  2. how much of that is foreign central banks? I suspect they see their purchases as writeoffs, and a way to stimulate their own countries' exports. Every central bank out there seems to be determined to debase the currency they issue. Your point still holds, though: U.S. imports are flagging too, with no end in sight. Soon there will be no rationale for anyone except the Fed to buy treasuries.

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  3. The big question is how much of UK debt is owed to foreigners?

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