

Who owns America? Hint: It's not China - jhowell
http://globalpublicsquare.blogs.cnn.com/2011/07/21/who-owns-america-hint-its-not-china/

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pchristensen
Well, 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
Given 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?"

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jawns
Here'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-
de...](http://coding.pressbin.com/110/Treemap-shows-who-holds-US-debt/)

~~~
joe_the_user
Quibbles...

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).

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smackfu
It's interesting how close Japan is to China too, given how people aren't
fretting about Japan.

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roc
> _"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
There is a fun Michael Crichton book (and a subsequent movie) that captures
the "fretting" quite well IMHO. It's called Rising Sun.

~~~
MaysonL
Somewhere in the book boxes I have an autographed copy of that book which he
sent me as lagniappe along with a check as payment for a little Mac shareware
program I had then.

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zmanji
> The U.S. Treasury: $1.63 trillion (11.3 percent)

How can the Treasury have US Debt?

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dmooney1
Good 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_De...](http://en.wikipedia.org/wiki/File:Holders_of_the_National_Debt_of_the_United_States.gif)

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thyrsus
I 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.

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daemin
I found it amusing that Caribbean Banking Centres own so much of the debt.
Didn't realise there was that much capital there.

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jganetsk
Is the "U.S. Treasury" here the Federal Government, or the Federal Reserve?

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18pfsmt
It 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?

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fuzzmeister
That 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
Please 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>

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joe_the_user
Hmm,

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.

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chailatte
Wrong. 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/>

~~~
TomOfTTB
But 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>) 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)

~~~
rauljara
Did 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
I'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.

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Steko
And the people implying this are usually anti-government nuts.

The fact is tax increases of any kind are currently hard to get. Maybe as
benefits for seniors start disappearing we'll see that change since seniors
vote. If we ever get back to 20% of GDP for Federal tax revenues there's no
special reasoning that says getting to 21% is going to be any harder then
going from 18% to 19%. The whole 20% thing is just silly.

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temphn
Did you see the chart? That's what the empirical data shows. Tax avoidance
behavior increases as tax rates increase, you have moving targets.

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Steko
"Did you see the chart? That's what the empirical data shows."

It doesn't show any such thing. The whole truth is that from 1940 to 2000
average taxes paid including state and local went from 18% to 32%. Plenty of
governments around the world and a number of US states are over 20% in federal
taxes alone.

"Tax avoidance behavior increases as tax rates increase, you have moving
targets."

This is obvious but, unfortunately, does not get you to "it's impossible to
collect more then 20% federal taxes"

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ldar15
8% 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-
imposs...](http://ftalphaville.ft.com/blog/2011/06/22/602761/the-impossible-
debt-ceiling-rollover/)

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.

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dreamdu5t
Nobody owns America. Dumb title.

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lawlit
Who's America ?

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Shenglong
Why are Taiwan and HK in a different category than China?

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astine
The 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.

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toisanji
You 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.

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mrcsparker
That all depends where you are sitting. The Chinese certainly don't consider
them a separate country.

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brown9-2
But realistically speaking, Taiwan has it's own government, China has no say,
and other governments of the world interact with Taiwan as a peer.

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Wilduck
Although the US does not officially recognize them as a separate country.

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kelnos
... for political reasons only. Taiwan self-governs, and is economically
distinct from China, which is what matters here.

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ldar15
Unless 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
I 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.

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TomOfTTB
The 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>). 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
Being able to produce additional revenues of 1 or 2% from an economy of
_trillions_ is not my measure of ineffective tax increases.

~~~
TomOfTTB
It 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?

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antihero
If you owe money to yourself why can you not write that debt off?

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silentOpen
Self = same economic system/country. Or would you have America writing off
loans from American citizens?

