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Most U.S Treasuries are held by American citizens, it's why fiscal hawks are always ranting that defecit spending "bankrupts our kids", foreign holdings are ins

Most U.S Treasuries are held by American citizens, it's why fiscal hawks are always ranting that defecit spending "bankrupts our kids", foreign holdings are insignificant in the grand scheme, and as noted the largest holders are all allies.

cobbzilla 7y ago
Wikipedia has foreign holdings at 28% and growing as of 2008 [1]. That’s enough for bargaining leverage in many situations. [1] https://en.wikipedia.org/wiki/National_debt_of_the_United_States https://en.wikipedia.org/wiki/National_debt_of_the_United_St...
- khuey 7y ago
  If the entire world pooled their holdings, yeah, sure.
  - zaroth 7y ago
    Wake me up when they pool their armies.
  - cobbzilla 7y ago
    1 The prospect of a default will tend to align incentives across all debt-holders. 2 Of the foreign debt, Japan + China hold the lion’s share at about 40%, so definitely worry if you ever see those two aligning against us. It will be important for the US not to piss off Japan.
- nradov 7y ago
  Which situations?
chibg10 7y ago
What does this have to do with anything? The problem with too much US debt is that we have to make interest payments on that debt, which now makes up ~10% of the annual budget (or about $400B/yr). That's expensive and going to get worse if we continue borrowing at unsustainable rates. It's also going to get a lot worse if investors start to worry the US might default on its debts and demand higher yields on return. I'm not sure why you think it matters whether China or Europe is holding the debt.
- phil248 7y ago
  A friend may work with you to negotiate terms, even at their own expense. A rival may use it against you in pursuit of their own benefit.
- arcticbull 7y ago
  > What does this have to do with anything? The problem with too much US debt is that we have to make interest payments on that debt, which now makes up ~10% of the annual budget (or about $400B/yr). That may matter to you as an individual but governments get to print money. It's like if I issued IOUs denominated in Steve's Funbucks that I'm the sole issuer of, and those IOU holders lived across the ocean and also I had half the world's armed forces at my disposal. Then when things went sideways I fired up the Epson and paid you off. As it turns out inflation is not directly connected to the issuance of new money, although it does contribute. Balancing a federal checkbook isn't the same as your home finances. I'm not saying you should go to town and print a ton of money and that nothing would happen, I'm saying it can play a role and isn't directly equatable to small-scale finance. (Edit) further, borrowing to create economic activity is not zero sum. If you borrow 100K and create a business worth $1M, and reap the tax returns, it doesn’t matter how much you owe. If I borrow $1T and create a $5T economy, I doubt the kids will mind. This is in part why the money supply increases over time — to reflect the new scope of the economy. The only material risk of taking on debt is that you need to create returns in excess of your interest payments.
  - perl4ever 7y ago
    It seems to me that "half the world's armed forces" is a result of being able to print money, not a cause.
    - arcticbull 7y ago
      That could absolutely be true, but what difference does it make? I’m asking genuinely. To me that’s the how we got here, not what we do next.
    - SimbaOnSteroids 7y ago
ThrustVectoring 7y ago
That's pretty funny, since a trivial analysis of the flows of real goods and services will show that your kids are going to almost entirely consume the real goods and services that they produce. No, what excessive deficit spending does is generate an excess of financial assets that lay claim to the same pile of goods and services. This makes the financial assets less valuable, reducing the ability for current savers to trade their assets for today's real goods and services. This is through a combination of an increase in interest rates (reducing the value of bonds) or through outright inflation. Another way of thinking about it: the supply of real goods and services is relatively fixed, so what happens when the government consumes more today? Somehow this needs to reduce the real goods and services consumed by society, and that can only happen in a few ways: involuntarily through taxation, involuntarily through loss of purchasing power due to inflation, or voluntarily through selling more attractive financial assets.
- maxerickson 7y ago
  The supply of real goods is anything but fixed. On my side, I have evidence like the global population doubling while poverty plummeted. There's still lots of people without enough to eat, but 30 or 40 years ago was a completely different story, it was much worse.
  - ThrustVectoring 7y ago
    Fixed, in the short run, with respect to money, while there is sufficient money in the economy.
- pjc50 7y ago
  Part of the argument of Keynes was observing that supply is not at all fixed, there is idle capacity - unemployed people and idle physical capital. Production can be increased without inflation up until "full employment" is reached.
  - ThrustVectoring 7y ago
    The curve of money supply versus output is flat at the "way too much money" end of it. If there isn't enough money then obviously you fix the problem - but this isn't where the deficit hawks are usually worried about debt.
nabla9 7y ago
Estimated Ownership of U.S. Treasury Securities (From Fed Bulletin) $22T - Total Federal securities outstanding $9T - Federal Reserve and Government accounts + State and local governments including pension funds $2T - Mutual funds $2T - Depository institutions, private pension funds, insurance companies. $3T - Other domestic investors. Includes individuals, Government-sponsored enterprises, brokers and dealers, bank personal trusts and estates, corporate and non-corporate businesses, and other investors $6T - Foreign and international

cobbzilla 7y ago

Wikipedia has foreign holdings at 28% and growing as of 2008 [1]. That’s enough for bargaining leverage in many situations. [1] https://en.wikipedia.org/wiki/National_debt_of_the_United_States https://en.wikipedia.org/wiki/National_debt_of_the_United_St...

khuey 7y ago
If the entire world pooled their holdings, yeah, sure.
- zaroth 7y ago
  Wake me up when they pool their armies.
- cobbzilla 7y ago
  1 The prospect of a default will tend to align incentives across all debt-holders. 2 Of the foreign debt, Japan + China hold the lion’s share at about 40%, so definitely worry if you ever see those two aligning against us. It will be important for the US not to piss off Japan.
nradov 7y ago
Which situations?

chibg10 7y ago

What does this have to do with anything? The problem with too much US debt is that we have to make interest payments on that debt, which now makes up ~10% of the annual budget (or about $400B/yr). That's expensive and going to get worse if we continue borrowing at unsustainable rates. It's also going to get a lot worse if investors start to worry the US might default on its debts and demand higher yields on return. I'm not sure why you think it matters whether China or Europe is holding the debt.

phil248 7y ago
A friend may work with you to negotiate terms, even at their own expense. A rival may use it against you in pursuit of their own benefit.
arcticbull 7y ago
> What does this have to do with anything? The problem with too much US debt is that we have to make interest payments on that debt, which now makes up ~10% of the annual budget (or about $400B/yr). That may matter to you as an individual but governments get to print money. It's like if I issued IOUs denominated in Steve's Funbucks that I'm the sole issuer of, and those IOU holders lived across the ocean and also I had half the world's armed forces at my disposal. Then when things went sideways I fired up the Epson and paid you off. As it turns out inflation is not directly connected to the issuance of new money, although it does contribute. Balancing a federal checkbook isn't the same as your home finances. I'm not saying you should go to town and print a ton of money and that nothing would happen, I'm saying it can play a role and isn't directly equatable to small-scale finance. (Edit) further, borrowing to create economic activity is not zero sum. If you borrow 100K and create a business worth $1M, and reap the tax returns, it doesn’t matter how much you owe. If I borrow $1T and create a $5T economy, I doubt the kids will mind. This is in part why the money supply increases over time — to reflect the new scope of the economy. The only material risk of taking on debt is that you need to create returns in excess of your interest payments.
- perl4ever 7y ago
  It seems to me that "half the world's armed forces" is a result of being able to print money, not a cause.
  - arcticbull 7y ago
    That could absolutely be true, but what difference does it make? I’m asking genuinely. To me that’s the how we got here, not what we do next.
  - SimbaOnSteroids 7y ago

ThrustVectoring 7y ago

That's pretty funny, since a trivial analysis of the flows of real goods and services will show that your kids are going to almost entirely consume the real goods and services that they produce. No, what excessive deficit spending does is generate an excess of financial assets that lay claim to the same pile of goods and services. This makes the financial assets less valuable, reducing the ability for current savers to trade their assets for today's real goods and services. This is through a combination of an increase in interest rates (reducing the value of bonds) or through outright inflation. Another way of thinking about it: the supply of real goods and services is relatively fixed, so what happens when the government consumes more today? Somehow this needs to reduce the real goods and services consumed by society, and that can only happen in a few ways: involuntarily through taxation, involuntarily through loss of purchasing power due to inflation, or voluntarily through selling more attractive financial assets.

maxerickson 7y ago
The supply of real goods is anything but fixed. On my side, I have evidence like the global population doubling while poverty plummeted. There's still lots of people without enough to eat, but 30 or 40 years ago was a completely different story, it was much worse.
- ThrustVectoring 7y ago
  Fixed, in the short run, with respect to money, while there is sufficient money in the economy.
pjc50 7y ago
Part of the argument of Keynes was observing that supply is not at all fixed, there is idle capacity - unemployed people and idle physical capital. Production can be increased without inflation up until "full employment" is reached.
- ThrustVectoring 7y ago
  The curve of money supply versus output is flat at the "way too much money" end of it. If there isn't enough money then obviously you fix the problem - but this isn't where the deficit hawks are usually worried about debt.

nabla9 7y ago

Estimated Ownership of U.S. Treasury Securities (From Fed Bulletin) $22T - Total Federal securities outstanding $9T - Federal Reserve and Government accounts + State and local governments including pension funds $2T - Mutual funds $2T - Depository institutions, private pension funds, insurance companies. $3T - Other domestic investors. Includes individuals, Government-sponsored enterprises, brokers and dealers, bank personal trusts and estates, corporate and non-corporate businesses, and other investors $6T - Foreign and international