Infographic: Which Countries Own America’s Debt? | Hacker News Reader

Infographic: Which Countries Own America’s Debt?

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32 pointscwan20 comments

China has been buying the U.S.'s debt since the mid 90's, when they pegged their currency to the dollar, in order to maintain their peg and keep the yuan from appreciating. From 2005-2008 they abandoned their peg for a managed float and let their currency appreciate about 21% due to pressures from the U.S. because their currency was artificially undervalued which negatively affects the global trade balance and the global economy. In 2008, however, they went back to the peg to protect their export sector and to stabilize their economy and have remained with the peg since.

China has actually dug themselves into a large hole with their monetary policy. The yuan is grossly undervalued and needs to appreciate, however, if they let it appreciate, their U.S. denominated holdings, mostly U.S. Treasury Securities, currently valued at $2.4 trillion, will lose value. It is also in their interest to keep buying our debt because it allows us to keep interest rates down and consume more, and the U.S. is China's largest export market. But on the other hand, if China tries to sell their securities, this will lead to increased supply in the market which will drive down the price of the securities, which will in turn decrease the value of their holdings.

The financial crisis has led to the depreciation of the dollar, and the yuan along with it since it's pegged, compared to most other currencies. This has greatly impacted the emerging and developed countries' economies that rely on exports for growth because they simply cannot compete with China's artificially low export prices.

This is an interesting issue and it will be interesting to see how it plays out. To get a great summary of the current situation, this is a great, quick read that sums it up nicely: http://www.fas.org/sgp/crs/row/RS21625.pdf

Note that this graphic only accounts for ~25% of total US debt - the foreign-held portion.

The majority is owned by US institutions (mostly the fed):

http://en.wikipedia.org/wiki/File:Estimated_ownership_of_tre...

True, although when one part of the state prints money to "lend" to another part of the state, I'm not sure how useful it is to include that as part of a total "debt" figure. It's just an artefact of the way the US chooses to implement its monetary policy.

Any economists feel like weighing in on this?

The Fed is a private institution, though a small stake is owned by the US government. So it's not really one part of the state lending it to another part of the state.

http://www.federalreserve.gov/generalinfo/faq/faqfrs.htm#5

"It is not 'owned' by anyone and is 'not a private, profit-making institution'. Instead, it is an independent entity within the government," however for our purposes this quote is probably more relevant, "the Federal Reserve must work within the framework of the overall objectives of economic and financial policy established by the government."

So, independent, but founded to enact government policy.

While your summary is technically correct, just look at any of your bills. What does it say? "Federal Reserve Note". Your money is not printed by your government. With all the implications that carries, including your government lending it from FED on interest.

The title of the image says "who owns America's debt" (the total amount of bonds we've sold), but the caption, and the dollar amount, suggest that it's actually about the deficit (the total amount - in a given year - by which government expenditures exceed the amount of money taxed from citizens).

how about a better link/image? http://www.usfst.com/media/media-news/infographics/usdebt.pn...

... or maybe an accurate one? http://upload.wikimedia.org/wikipedia/commons/1/17/Estimated...

Wow, Japan has more US debt than I thought. Anyone know how that happened? US companies don't tend to build stuff in Japan, do they?

Remember how before all of our consumer electronics became Chinese they used to be Japanese. Also remember how most cars that work in america are also Japanese. We have been running a huge trade deficit with Japan since the 80s.

In fact I am surprised that China overtook Japan already.

They've overtaken Japan only in deficit (i.e. the derivative of debt); Japan could very well still have more debt.

I don't think the holders of US debt are related to trade. I think most US securities are held by governments and institutions as reliable, steady investments.

Actually I think it might be both. As I understand it, the US tends to pay for imports in USD, which it can do since it is the world's reserve currency. Trading partners then invest their USD trade surpluses back in US securities, I would assume at least partly to avoid affecting the values of their own currencies.

Wikipedia's article on the rise and fall of the Bretton Woods system is fascinating reading for those interested in the origins of the current situation (although it's also long and dry).

http://en.wikipedia.org/wiki/Bretton_Woods_system

According to this USA owes me $6.5, I accept cash, visa and hot chicks.

This chart seems to be off. China only holds over $2b? According to this: http://upload.wikimedia.org/wikipedia/commons/a/aa/Foreign_H... China holds almost $800b of US Treasury Securities.

The chart is for deficit, not debt (see the inky dinky text at the bottom of the infographic)

I don't think that's correct. The text at the top refers to "Holders of Treasury Securities" and the legend on the side says each $ equals 10m of Treasury Securities. I.e. debt.

In addition the graphic seems totally screwy. There are 32 rows of 35 dollar signs (total of 1120) which means that $11.2 billion are represented. Which bears no resemblance to either the number at the top nor the one at the bottom.

In addition, the number at the top ($3.4 billion) seems quite small in relation to the one at the bottom.

Seems screwed up.

Perhaps it's just a completely fucked graphic then? If it takes this many HNers to try to decipher its meaning, I doubt there's any hope for the average population.

How much of the debt of these countries does the US own?

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