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Where are these interest payments going to? Who profits off the US being perpetually in debt?

by swebs 8y ago

koverda 8y ago
I believe it is those who own US Treasury Securities. These are the foreign holdings: http://ticdata.treasury.gov/Publish/mfh.txt http://ticdata.treasury.gov/Publish/mfh.txt From what I understand, the rest are citizens & US based funds.
Robotbeat 8y ago
Everyone who buys bonds, so like every retirement account.
ebikelaw 8y ago
Obviously the people who enjoyed the benefits of the borrowed money. Which might have been road users and university students, but actually turned out to be hundreds of thousands of dead Iraqis.
sp332 8y ago
The treasury has a one-page breakdown of the kinds of debt. https://www.treasurydirect.gov/govt/reports/pd/mspd/2018/opds062018.pdf https://www.treasurydirect.gov/govt/reports/pd/mspd/2018/opd... It's not a deep dive but I thought it was a great overview for fitting on one page. (edit: more recent link)
- 5874-4b22-a4e0 8y ago
  19k could be paid off by a single person, has this increased in the last two years?
  - sp332 8y ago
    In tiny print above that: (Millions of dollars)
  - bannable 8y ago
    Take another look at the table - the values are denominated in millions of dollars, and that second symbol is a comma, not a period, so it's 19 million million.
tialaramex 8y ago
Interest payments go to whoever holds the relevant debt security when the interest payment is made. But since the size of this payment is known in advance and the United States is (so far at least) a good debtor, this will be priced into the security before the payment is made. In the case of T-bills, this is just baked into the price. The way that works is the US government says OK, a year from now we will give you $1000 for this piece of paper, now, how much will you buy the piece of paper for? And maybe they can find buyers for $985, so they get $985 now (which they can spend on stuff the United States needs, now) and they pay back $1000 in a year, by which time it's very possible that they've benefited by far more than $15 in practical terms. If you have a generic investment that can't afford to accidentally fall in value massively overnight, but does need some liquidity, particularly if you're American, there's a good chance it's invested in buying these securities, whether T-bills, notes or bonds, because the US government has, so far at least, been good for the money. For example if you're going to need your pension funds in two years, you can't afford to have them tied to the NASDAQ just as the dotcom crash smashes it, but Treasury notes are a much safer place to keep it, even though say MSFT _on average_ makes more money over a long time.
fred_is_fred 8y ago
Me, you (indirectly if nothing else), mutual funds, companies, countries.

Where are these interest payments going to? Who profits off the US being perpetually in debt?

by swebs 8y ago

Where are these interest payments going to? Who profits off the US being perpetually in debt?

I believe it is those who own US Treasury Securities. These are the foreign holdings: http://ticdata.treasury.gov/Publish/mfh.txt http://ticdata.treasury.gov/Publish/mfh.txt From what I understand, the rest are citizens & US based funds.

Robotbeat 8y ago

Everyone who buys bonds, so like every retirement account.

ebikelaw 8y ago

Obviously the people who enjoyed the benefits of the borrowed money. Which might have been road users and university students, but actually turned out to be hundreds of thousands of dead Iraqis.

sp332 8y ago

The treasury has a one-page breakdown of the kinds of debt. https://www.treasurydirect.gov/govt/reports/pd/mspd/2018/opds062018.pdf https://www.treasurydirect.gov/govt/reports/pd/mspd/2018/opd... It's not a deep dive but I thought it was a great overview for fitting on one page. (edit: more recent link)

5874-4b22-a4e0 8y ago
19k could be paid off by a single person, has this increased in the last two years?
- sp332 8y ago
  In tiny print above that: (Millions of dollars)
- bannable 8y ago
  Take another look at the table - the values are denominated in millions of dollars, and that second symbol is a comma, not a period, so it's 19 million million.

tialaramex 8y ago

Interest payments go to whoever holds the relevant debt security when the interest payment is made. But since the size of this payment is known in advance and the United States is (so far at least) a good debtor, this will be priced into the security before the payment is made. In the case of T-bills, this is just baked into the price. The way that works is the US government says OK, a year from now we will give you $1000 for this piece of paper, now, how much will you buy the piece of paper for? And maybe they can find buyers for $985, so they get $985 now (which they can spend on stuff the United States needs, now) and they pay back $1000 in a year, by which time it's very possible that they've benefited by far more than $15 in practical terms. If you have a generic investment that can't afford to accidentally fall in value massively overnight, but does need some liquidity, particularly if you're American, there's a good chance it's invested in buying these securities, whether T-bills, notes or bonds, because the US government has, so far at least, been good for the money. For example if you're going to need your pension funds in two years, you can't afford to have them tied to the NASDAQ just as the dotcom crash smashes it, but Treasury notes are a much safer place to keep it, even though say MSFT _on average_ makes more money over a long time.

fred_is_fred 8y ago

Me, you (indirectly if nothing else), mutual funds, companies, countries.