Foreigners Own More of Nation's Debt
We've just finished celebrating the Fourth of July. What better time than now to contemplate the state of our nation's independence? Financial independence, that is.</br></br>Here's the deal. The United States has the mightiest economy in the world, but we've become enormously dependent on foreign investors to lend us the money it takes to keep Uncle Sam's checks from bouncing. At least, that's how I interpret Treasury statistics that track the size and ownership of our national debt.</br></br>The statistics show that foreign and international investors account for the entire increase in privately owned Treasury securities since George W. Bush took office. Issuing those securities is how the Treasury covered federal budget shortfalls. Privately owned Treasury securities are those that belong to investors, as opposed to those owned by federal government trust funds or the Federal Reserve Board. Private investors own about half our $7 trillion-plus of national debt; the Fed and federal trust funds own the rest.</br></br>According to Treasury data -- table OFS-2, if you want see for yourself, on the Web at www.fms.treas.gov/bulletin/ b24ofs.doc -- when the Bush administration started, we had $2.88 trillion of privately held national debt, of which $1.03 trillion was owned by foreign and international investors. As of March 31, the most recent data available, privately owned debt had risen to $3.5 trillion, of which foreigners owned $1.71 trillion.</br></br>Now, a little math. Privately owned debt, as you can see, was up by $620 billion since the Bush administration started -- but foreigners' holdings were up by $680 billion. This means that foreigners accounted for the entire increase in privately held debt - - and then some.