8 ms·
Who owns America? Hint: It's not China
- Shenglong 15y agoWhy are Taiwan and HK in a different category than China?
- astine 15y agoThe Republic of China is an entirely separate country from the People's Republic of China. Hong Kong, likewise, is economically and administratively separate from the rest of China.
- retube 15y agoTIL Taiwan is actually called the Republic of China! http://en.wikipedia.org/wiki/Republic_of_China http://en.wikipedia.org/wiki/Republic_of_China
- toisanji 15y agoYou are correct that Taiwan is a separate country. Hong Kong 100% belongs to China and so any decision that comes from Hong Kong actually comes from Beijing.
- mrcsparker 15y agoThat all depends where you are sitting. The Chinese certainly don't consider them a separate country.
- brown9-2 15y agoBut realistically speaking, Taiwan has it's own government, China has no say, and other governments of the world interact with Taiwan as a peer.
- Wilduck 15y agoAlthough the US does not officially recognize them as a separate country.
- kelnos 15y ago... for political reasons only. Taiwan self-governs, and is economically distinct from China, which is what matters here.
- ldar15 15y agoUnless we are talking about China using the debt for hostile purposes, in which case the independence of RoC and what it may be willing to do to stay independent, might be exactly what matters. Ditto HK. I assume everyone involved has plans to move their money if PRC attempts nationalization, but if its delivers instructions to "keep your money, just dont roll it over" or "dont roll it over and we'll cover any loses as the dollar ceases to exist" then some people will have some hard choices to make.
- kelnos 15y agoI suppose there's also a question of what (if anything) the US would do to help Taiwan stay independent if China decided to re-unify via force. Definitely a potentially sticky situation.
- astine 15y agoNevertheless, it is economically and administratively distinct. Debt controlled by Hong Kong is controlled by a substantially different set of people than debt controlled by China proper.
- 4J7z0Fgt63dTZbs 15y agothe problem is that Mainland China is demanding other countries not to see Taiwan as a independent nation.
- astine 15y agoTaiwan makes the same claim on China. No one takes them seriously either (not since the Nixon administration anyway.) It's the same with the Koreas.
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- jeffool 15y agoI think you guys are over-arguing this. Governmental logistics aside, imagine the US sent a billion dollars in aid to a nation. Now imagine California also did the same. Did the US (the federal government) send two billion? No. They are clearly two different entities in this exchange, without trying to explain the nuance. That said, the reason why they're separate is very important politically, but that can be best described with a link to simple.Wikipedia or something.
- pchristensen 15y agoWell, they're the largest non-US-govt owner, including $150B more than US households. I'm not sure the Treasury and Social Security Trust count as far as external influencers, so China is still at the top of the pile, despite only owning 8%.
- roc 15y agoGiven the current debt ceiling situation, I think it's more likely this breakdown is being presented as an answer to the question "who suffers if we default?" rather than "how reliant are we on external influences?"
- TomOfTTB 15y agoThe problem with this assessment is a large part of our debt is owed to a shell game. Raising taxes has proven ineffective when it comes to generating large amounts of revenue. Look at history and tax revenue as a % of GDP remains remarkably steady despite the top tax rate falling almost 70%(http://tinyurl.com/3dgkupq http://tinyurl.com/3dgkupq). So the old saying that you can't raise taxes higher than the amount it would cost a rich guy to cheat the tax system holds pretty true. Maybe we'll find some miraculous way to fix that problem but as of right now we can't expect huge gains by raising taxes. That means the roughly 43% we owe ourselves either (a) can't be paid back or (b) will have to be borrowed from foreign countries. Because we can't raise the revenue in time to pay out the debt to pension funds, Social Security and private citizens saving for retirement. So the People/Government who owns America is really whoever will be willing and able to loan us money when the U.S. citizens we owe come to collect their money.
- true_religion 15y agoBeing able to produce additional revenues of 1 or 2% from an economy of trillions is not my measure of ineffective tax increases.
- TomOfTTB 15y agoIt is when your debt is approaching 100% of your GDP and you owe 40% of it to yourself. Think about it. If GDP and our Debt are roughly equal how is 1 or 2% a year increase in revenue going to be able to pay 40% + interest of debt?
- antihero 15y agoIf you owe money to yourself why can you not write that debt off?
- silentOpen 15y agoSelf = same economic system/country. Or would you have America writing off loans from American citizens?
- smackfu 15y agoIt's interesting how close Japan is to China too, given how people aren't fretting about Japan.
- TomOfTTB 15y agoWhat is interesting to me is how much those two countries are themselves in debt. Everyone knows about Japan but China has quite a mess to deal with too: http://tinyurl.com/3upnavb http://tinyurl.com/3upnavb
- SoftwareMaven 15y agoPlease don't use URL shorteners. It is considered bad form on HN where we don't have a 140 character limit. We want to know where we are going before we go.
- politician 15y agokarma-whoring: http://www.economist.com/node/18775343 http://www.economist.com/node/18775343
- roc 15y ago> "given how people aren't fretting about Japan." They aren't fretting about Japan anymore. But in the 1980s there was an anti-japan screed equivalent for just about anything you read today about China. With regards to economics anyway.
- iqster 15y agoThere is a fun Michael Crichton book (and a subsequent movie) that captures the "fretting" quite well IMHO. It's called Rising Sun.
- golgo13 15y agoDon't forget about the 80's flick, Gung Ho, where a Japanese Company takes over an American Car plant. http://en.wikipedia.org/wiki/Gung_Ho_(film) http://en.wikipedia.org/wiki/Gung_Ho_(film)
- chailatte 15y agoWrong. Seniors owns America. Social security liability: 15 Trillion Prescription drug liability: 20 Trillion Medicare liability: 79 Trillion US unfunded liabilities: 114 Trillion http://www.usdebtclock.org/ http://www.usdebtclock.org/
- TomOfTTB 15y agoBut again (as I said below and was completely unfairly downvoted) we have no way to raise that much money to pay the seniors. Because Tax revenue tends to stay consistent as a % of GDP(http://tinyurl.com/3dgkupq http://tinyurl.com/3dgkupq) even when the top tax rate is raised to 80 or 90% (which it was in the 50s). So the person who really owns America is whoever is going to lend us the money to pay the seniors (and those becoming seniors) in the next 30 or so years. (And yes I'm prepared to be Downvoted here too but I'd rather be downvoted while trying to get people to face an obvious truth than hide from a bully with a quick mouse finger)
- radicaldreamer 15y agoYou won't be downvoted because what you say is true. It's going to be very challenging to pay for all of these entitlement programs. We've essentially outsourced to the government what for millennia has been taken care of by families- caring for our seniors and elderly. If we want to have a sustainable path forward, this is something that we as a society will eventually have to confront, come to terms with, and hopefully solve.
- rauljara 15y agoDid you read your own chart? Between 1942 and today, it ranges from ~14% to ~21%. I don't know if you're aware of this, but 7% of GDP is a big deal. Incidentally, the same chart you point to shows how tax income is about as low of a share of GDP as its ever been since 1950.
- karzeem 15y agoI've seen the same point made elsewhere, and the point isn't really that tax revenue stays constant as a % of GDP, it's that there seems to be a ceiling around 20%. The implication being that attempts to raise tax revenue greater than 20% of GDP are likely to fail.
- lawlit 15y agoWho's America ?
- thyrsus 15y agoI went to the "source" slideshow, and I still can't tell how much these categories overlap. Part of my 401K is invested in a strictly-U.S. Treasury Bonds mutual fund. Does that count as owned by a household or by a mutual fund or get counted twice? [Edit: I didn't read far enough in the source: the linked article misstated "Federal Reserve" as "Treasury"] Also, how does the U.S. Treasury "own" the debt? I thought Treasury issued the debt, and the Federal reserve controlled (more exactly "influenced") the interest rate by deciding how much of those bonds to buy. So I expected the Federal Reserve should have shown up as a large debt holder.
- zmanji 15y ago> The U.S. Treasury: $1.63 trillion (11.3 percent) How can the Treasury have US Debt?
- dmooney1 15y agoGood question. The Treasury controls numerous trust and pension funds that are heavily invested in US Bonds. See http://en.wikipedia.org/wiki/File:Holders_of_the_National_Debt_of_the_United_States.gif http://en.wikipedia.org/wiki/File:Holders_of_the_National_De...
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- jawns 15y agoHere's a treemap visualization of U.S. debt holders, based on data from this article: http://coding.pressbin.com/110/Treemap-shows-who-holds-US-debt/ http://coding.pressbin.com/110/Treemap-shows-who-holds-US-de...
- joe_the_user 15y agoQuibbles... A good portion of titles are cut-off. As has been pointed out, it's doubtful the US treasury itself counts as being in the same category as US house-holds (the US treasury prints the money it uses to buy US debt, that's hold money gets printed).
- jganetsk 15y agoIs the "U.S. Treasury" here the Federal Government, or the Federal Reserve?
- 18pfsmt 15y agoIt is unclear by your comment whether you are aware that the Federal Reserve is a private organization, and is not part of the US government. Or, perhaps that is your point?
- fuzzmeister 15y agoThat is rather disingenuous. While the Fed can make decisions outside the purview of the government, its power is derived from Congress, and its governors are appointed by the President and confirmed by Congress. It's certainly not an entirely private organization.
- 18pfsmt 15y agoPlease excuse my ignorance. I thought I knew something, and I was apparently mistaken. Several aspects taken from the wikipedia entry[1] stuck out for me: The Federal Reserve System's structure is composed of the presidentially appointed Board of Governors (or Federal Reserve Board), the Federal Open Market Committee (FOMC), twelve regional Federal Reserve Banks located in major cities throughout the nation, numerous privately owned U.S. member banks and various advisory councils.[ The Federal Reserve System has both private and public components, and was designed to serve the interests of both the general public and private bankers. It is also unusual in that an entity outside of the central bank, namely the United States Department of the Treasury, creates the currency used. However, its authority is derived from the U.S. Congress and is subject to congressional oversight. Additionally, the members of the Board of Governors, including its chairman and vice-chairman, are chosen by the President and confirmed by Congress. The government also exercises some control over the Federal Reserve by appointing and setting the salaries of the system's highest-level employees. Thus the Federal Reserve has both private and public aspects. Various statutory changes, including the Federal Reserve Transparency Act, have been proposed to broaden the scope of the audits. Bloomberg L.P. News brought a lawsuit against the Board of Governors of the Federal Reserve System to force the Board to reveal the identities of firms for which it has provided guarantees.[140] Bloomberg, L.P. won at the trial court level,[141] and as of early September 2010 the case is on appeal at the United States Court of Appeals for the Second Circuit. [1]http://en.wikipedia.org/wiki/Federal_Reserve http://en.wikipedia.org/wiki/Federal_Reserve
- ldar15 15y ago8% might not "own" us, but its enough to "pwn" us. Here's some nice commentary about the reality of the debt limit: http://ftalphaville.ft.com/blog/2011/06/22/602761/the-impossible-debt-ceiling-rollover/ http://ftalphaville.ft.com/blog/2011/06/22/602761/the-imposs... Many point out that, even if the government "shuts down", we have enough to pay the interest on all our debt, so we don't have to worry about default. But that completely ignores maturing treasury bills. In order for us not to be up shit creek, we need China, Japan, Wall Street, HK to rollover these bonds (i.e use the money we owe on them to buy more). Most of this debt is short term (less than two years). What happens to our economy if China decides not to rollover $1T over that time? Or starts selling it? If it doesn't end with everyone else throwing in the towel, it will at least end with huge interest rates. The only thing stopping the US becoming 1930's Germany is the Chinese. It's nice that we have all the other requirements in place: Father^H^H^H^Hhomeland Security, Christian Fundamentalists, huge military, secret police, massive jails.
- joe_the_user 15y agoHmm, The two biggest treasury bond holder are agencies of the government. Which essentially is money that's been printed rather than debt. The third largest holder of the debt is China. China plus Japan have more than US house holds. The banks, mutual funds, etc. could themselves be owned by anyone, so I don't those figures saying much. So, as far as I can, the figures seem to say foreigners own a huge amount of US debt. Of course, this "bonds in America", not "stock in America" so they don't have any option to remove the "board of directors". Still, given how the current management is doing, I almost they could.
- dreamdu5t 15y agoNobody owns America. Dumb title.
- daemin 15y agoI found it amusing that Caribbean Banking Centres own so much of the debt. Didn't realise there was that much capital there.