US Monetized 52 Percent of the $5 Trillion New Debt Since Self-Inflicted Doomsday of March 2020

Hedge fund managers took on half of the rest but individuals with skin in the game actually liquidated 20% ($400bn) of what they held

Fed “bought” $2.7 trillion with newly-created money

The US gross national debt outstanding has ballooned by over $5 trillion since early March 2020, to $28.4 trillion, where it has been stuck since August 1 when the debt-ceiling farce recommenced.

The burning question is who the heck bought these Treasury securities and who is holding them, given that everyone who is buying any of them now is getting crushed by historically steep negative “real” yields, with CPI inflation outrunning even the 30-year Treasury yield by 3.5 percentage points.

The Treasury Department released its Treasury International Capital data this afternoon. It tracks foreign holdings of Treasury securities by country through June. Now we can piece the holdings together. And it’s quite a show.

Federal Reserve very busy.

The Fed increased its holdings of Treasury securities by $241 billion in Q2 and by $2.6 trillion since March 2020, more than doubling its holdings in 16 months (blue line, left scale), which brought its holdings in Q2 to a record of 18.2% of the Incredibly Spiking US National Debt (red line, right scale):

US Banks gorge on Treasuries.

US commercial banks increased their holdings of Treasury securities by $96 billion in Q2 and by $424 billion since March 2020, to a record $1.4 trillion, according to Federal Reserve data on bank balance sheets. They now hold 4.9% of the Incredibly Spiking US National Debt:

US Mutual Funds, Money Market Funds, & ETFs

US Mutual Funds, Money Market Funds, & ETFs, from March 2020 through Q1 2021, increased their holdings of US Treasuries by $1.26 trillion, to a record of $3.9 trillion, according to the latest data available from SIFMA (Securities Industry and Financial Markets Association). This brought their share of the US National Debt to a record 13.9% at the end of Q1 (red line, right scale).

Note the massive jump in 2020, largely due to the increase in holdings by money-market funds. SIFMA has not yet released Q2 data, but it likely jumped in line with the situation we have been encountering starting in April with the Fed’s massive liquidity-mop-up operation via Overnight Reverse Repos (chart shows annual data; 2021 = Q1 level):

Individual investors

Individual investors are a fickle bunch. They have been unloading their direct holdings of US Treasuries in 2020 and 2021 through Q1, to $1.54 trillion, down by $400 billion from the peak in Q4 2019, according to SIFMA (blue line, left scale).

Note, amusingly, the plunge in holdings to essentially zero from 2000 through the peak real estate frenzy in 2007. After the real-estate collapse, American fell in love with Treasuries again, though the yields were piss-poor.  Their share in Q1 amounted to 5.5% of the monstrous US debt:

Source: Wolf Street

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Mr Reynard
Mr Reynard
2 months ago

Hmm.. A Trillion here ?? A Trillion there ?? Soon you’re talking serious money ?

JameT
JameT
2 months ago

Not market. Manipulation.

ken
ken
2 months ago

Soon we will be talking quadrillions. Then quintilians,,, sextillions,,, septillions,,, which all of them are really upyourstillion as they are stolen from you and I.

Each printed dollar, Yen, Euro ad nauseum dilutes those in your wallet basically robbing you and they’re laughing all the way to the bank. Soon they’ll be digital allowing the crooks to rob at even a faster pace while we sit around twiddling our thumbs, calling each other vile names, cancelling each other, banning each other, beating each other , killing each other in order to get fewer and fewer table scraps.

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ken
ken
2 months ago
Reply to  ken

Watch the movie “Chaos” with Jason Stratham. There is a bank robbery where the thousands of accounts are hit for only a few dollars.

This exactly what the Fed is doing all the time except one is called robbery,,, the other inflation.

Raptar Driver
Raptar Driver
2 months ago

The United States economy is a massive ponzi scheme propped up by the rest of the world.
This is everyone’s problem.

Anti-Empire