Chart of the day – debt controlled by foreign governments
There’s been a lot of discussion about how much of our debt is controlled by foreign governments. The answer is found in this chart. In short a lot (more than half) and growing.
The significance? A sort of unacknowledged elephant in the room:
While the ownership of our debt may be theoretically neutral, there is a case to be made that this debt reliance gives significant bargaining power to individual foreign governments.
In the world of international politics, nothing is “theoretically neutral” that can be used as an advantage against another country. In the case of our debt we are handing out that ability each and every time we spend more than we have and ask foreign governments to finance it. Another in a seemingly endless number of reasons to cut spending, stop borrowing, pay off our debt and get our financial house in order.
~McQ
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Using data from the Department of Treasury’s Financial Statement of the United States, this chart shows the United States debt held by the public from 2000 to 2009. These holdings have been divided into debt held by domestic investors and foreign investors. In 2000, foreign investors held roughly half as much debt as domestic investors; by the end of 2009, foreign debt holdings were slightly greater than domestic holdings of the public debt. While the ownership of our debt may be theoretically neutral, there is a case to be made that this debt relief (http://debtreliefcounselingus.com) gives significant bargaining power to individual foreign governments.
This debt does not have voting rights. And what about the old saying: “If you owe the bank $10,000 and you cannot pay it, you have a problem. If you owe the bank $10 million and you cannot pay it, the bank has a problem.”? Won’t we be able to print money to pay these folks off with devalued dollars? Yes, we will be scr*wing everyone who holds American dollars, but aren’t we already doing that right now? Why just scr*w Americans?
Should I be typing “scr*w?
Yep. China will eventually find out that it should have let its currency rise, and accepted imports and had less exports, rather than lose a fair portion when we partially default.
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