Americans Are The Largest Holders of US Government Debt

Many people believe that China owns most of the US debt. This is not true. US investors are the largest holders of US debt and not China. China is the largest holder of US debt among foreign holders.

The chart below shows the holders of US treasury debt:

Click to enlarge


Source: The US is indebted to China: Fisher’s financial mythbusters, Oct 10, 2016, Money Observer

From the article:

Figure 1 (above, click to enlarge) shows who owns US Treasuries. American investors – individuals, corporations, charities, banks, mutual funds, hedge funds, and myriad other entities – own 38 per cent. They like owning Treasuries. They see them as safe (and they are!).


They don’t usually get a high return on them – haven’t since the early 1980s. Over long periods, stocks typically get better results, but investors are confident the US government will pay interest and return principal on maturity.

About 27 per cent is owned by hundreds of US federal government agencies, but mostly the Medicare and Social Security trust funds. People don’t worry about debt the US government owes to itself. States, public pension plans, and other local governments hold another 4 per cent.

So, 69 per cent of US federal debt is held by Americans, American governments, and/or American entities, which benefit Americans. Just 31 per cent is held by the non-US world. Of that, 6.2 per cent is held by China.

Interestingly, Japan holds 5.6 per cent – almost the same – but no one complains about that. And you don’t hear a lot of phobic fantasising about Japan dumping its Treasuries. Is there something magical about the Chinese that scares us, that isn’t magical about the Japanese?

Mathematically, it would make no difference to markets if the Japanese sold while the Chinese bought or vice versa. Then, the UK owns about 1 per cent – we’re perfectly sanguine about that.

Britain is our great friend! We don’t care about Mexico (0.4 per cent) or Thailand (0.2 per cent), Luxembourg (1.1 per cent), Germany (0.4 per cent), or India (0.6 per cent). All tiny!

Remember, China, Japan, the UK, Thailand, Luxembourg, and India are happy to buy and hold US debt. They can buy other nations’ debt. And they do! Just much less.

But they like buying US debt and do so to satisfy their own investing and/or policy ends, not from some sense of charity or kindness.

The total outstanding US public debt stands at 14,225,008,508,056.12 or $14.2 Trillion according to US Treasury. Out of this, China holds $1.2 Trillion followed by Japan at $1.11 Trillion. The majority of the $14.2 Trillion or about $10.0 Trillion is held by Americans.

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