Who is going to buy all this US debt? (2024)

Who is going to buy all this US debt? (1)

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Rod Khleif Who is going to buy all this US debt? (2)

Rod Khleif

Master Multi-Family Real Estate, Create Multi-Generational Wealth & Freedom, Invest Passively or Actively | 1-on-1 Expert Coach | Multifamily & Apartment Investing | Real Estate Investing | #1 Best-Selling Author

Published Jan 22, 2024

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Bloomberg recently estimated that interest expense on the United States' $33T debt just crossed $1T on an annualized basis. Federal receipts are $4.4T, which means almost a quarter of all revenue is consumed by interest. Interest expense has doubled over the past two years and will probably move higher with 2024 auction activity!

"Rather go to bed without dinner than to rise in debt." - Ben Franklin

We certainly have come a long way from the frugal beginnings of the country. The chart below shows how rapidly and seemingly out of control the US debt has skyrocketed to around $100K for every person in the country.

Who is going to buy all this US debt? (3)

In 2024, 33% of our outstanding public debt matures ($7.6T) and must be reissued in a higher rate environment. On top of this $7.6T, the federal deficit could hit $2.0T in 2024, which means the Treasury would have to issue nearly $10T of new debt. The question is: where is this money going to come from and what impact will this have on interest rates and taxes?

Of the $33T of debt, roughly 78% is owned by the public (70% US vs 30% International). The major US public owners include the FED ($6T, but they are no longer buyers), mutual funds, banks, states, pension funds and insurance companies. The international buying appetite has been falling over the past 10 years (dropping from 40% to the current 30%). The major international owners of US debt include Japan ($1.1T), China, UK, Belgium, Switzerland, Cayman Islands and smaller amounts from the rest of the world. After the recent weak treasury auction, US government officials warned that they are seeing waning demand from international buyers. China has been a net seller and Japan seems tapped out. The strong dollar is also working against the Treasury. The US dollar strength versus other currencies makes it attractive for international owners to sell US debt and use the dollars to buy their own currency, boosting the value.

The remaining debt (22%) is owned by inter-government agencies including Social Security and Medicare. If you believe that Social Security and Medicare are bleeding off their surplus, then logically they will be net sellers over time as they use reserves to pay recipients.

The auctions will come down to simple supply and demand. We know the supply is increasing and the demand is falling, which is bad for pricing. If the rates on Treasuries are attractive (higher) relative to other options, then we should be able to reissue the debt. In the most recent auction, the FED had to pivot to shorter term notes to entice buyers. Today, the 6-month treasury note yields 5.25% versus 4.0% for the 10-year, so clearly interest costs will increase in the short term if the US government is forced to issue short-term debt to attract buyers. If we don't get our deficits under control, the situation will only grow worse.

There is evidence, however, that higher interest rates on US debt are attracting new buyers. Two European money managers, Rathbones and Pictet, both recently announced an increase in their holdings of US Treasuries due to the attractive rates. Currently the US 10-year (4.0%) is higher than in the UK (3.8%), Spain (3.2%), Germany (2.2%) and Switzerland (0.8%), so it seems attractive relative to these options.

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How big Is our national debt? Big enough to terrify you Rick Berman 1 month ago

We are not sure how this will all shake out, but at some point, something has to give because the trajectory we are on is unsustainable. At the end of the day, someone will have to pay for the sins of the past. Taxes need to move higher, and spending needs to be cut; both moves would hurt the economy. A weakening economy would have a ripple effect across all businesses and commercial real estate. We do not think the tax and financing benefits awarded to multi-family would be impacted during the "balance the budget phase" that is coming, due to the core nature of our product. However, the cloudy outlook reinforces our conservative thinking when evaluating deals.

Cash Flow Club - https://creecashflowclub.com

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Ilan Brodsky



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great job rod!!!

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Digital Marketer | SEO Service Provider | YouTube SEO Expert | Social Media Marketing Manager | Google and Facebook Ads Service Provider | B2B Lead Generation. A Digital Marketing Specialist at Outsourcing BD Institute.


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Who is going to buy all this US debt? (2024)


Who is the biggest buyer of US debt? ›

Nearly half of all US foreign-owned debt comes from five countries. All values are adjusted to 2023 dollars. As of January 2023, the five countries owning the most US debt are Japan ($1.1 trillion), China ($859 billion), the United Kingdom ($668 billion), Belgium ($331 billion), and Luxembourg ($318 billion).

Who is the US paying debt to? ›

Who owns this debt? The public owes 74 percent of the current federal debt. Intragovernmental debt accounts for 26 percent or $5.9 trillion. The public includes foreign investors and foreign governments.

How much of US debt does China own? ›

China is one of the United States's largest creditors, owning about $859.4 billion in U.S. debt. 1 However, it does not own the most U.S. debt of any foreign country. Nations borrowing from each other may be as old as the concept of money.

Who owns all of the US debt? ›

1 Foreign governments hold a large portion of the public debt, while the rest is owned by U.S. banks and investors, the Federal Reserve, state and local governments, mutual funds, pensions funds, insurance companies, and holders of savings bonds.

Who owns over 70% of the US debt? ›

Who owns the most U.S. debt? Around 70 percent of U.S. debt is held by domestic financial actors and institutions in the United States. U.S. Treasuries represent a convenient, liquid, low-risk store of value.

How much US debt does Russia hold? ›

Russia does not hold any significant amount of debt or loans from the United States government.

Why is the US in so much debt? ›

One of the main culprits is consistently overspending. When the federal government spends more than its budget, it creates a deficit. In the fiscal year of 2023, it spent about $381 billion more than it collected in revenues. To pay that deficit, the government borrows money.

Does any country owe the US money? ›

China owes the United States $1.3 trillion, which is the most debt out of all the countries that are its debtors. Japan was the primary debt holder until 2008, but now comes in second place, with $1.2 trillion. Other countries with outstanding U.S. debt include Russia, India and South Korea.

What would happen if the US paid off its debt? ›

Answer and Explanation:

If the U.S. was to pay off their debt ultimately, there is not much that would happen. Paying off the debt implies that the government will now focus on using the revenue collected primarily from taxes to fund its activities.

What happens if China stops buying US debt? ›

If China (or any other nation that has a trade surplus with the U.S.) stops buying U.S. Treasuries or even starts dumping its U.S. forex reserves, its trade surplus would become a trade deficit—something which no export-oriented economy would want, as they would be worse off as a result.

Where does China own land in the US? ›

China owns 384,000 acres of American agricultural land. That's a 30% increase just since 2019. And on top of that, they own land near an air force base in North Dakota.

What country is in the most debt? ›

Profiles of Select Countries by National Debt
  • Japan. Japan has the highest percentage of national debt in the world at 259.43% of its annual GDP. ...
  • United States. ...
  • China. ...
  • Russia.

How much is the United States worth? ›

The financial position of the United States includes assets of at least $269 trillion (1576% of GDP) and debts of $145.8 trillion (852% of GDP) to produce a net worth of at least $123.8 trillion (723% of GDP).

How much debt can the US handle? ›

We estimate that the U.S. debt held by the public cannot exceed about 200 percent of GDP even under today's generally favorable market conditions.

Who are the three biggest holders of US debt? ›

  1. Japan. Japan held $1.15 trillion in Treasury securities as of January 2024, beating out China as the largest foreign holder of U.S. debt. ...
  2. China. China gets a lot of attention for holding a big chunk of the U.S. government's debt. ...
  3. The United Kingdom. ...
  4. Luxembourg. ...
  5. Canada.

Who are the major domestic buyers of US Treasury debt? ›

At this point, the Fed is no longer a buyer of Treasuries. Pension funds, mutual funds, retail portfolios, institutional portfolios, and an assortment of exchange traded funds have been important domestic buyers.

Who are the largest investors in the debt market? ›

Traditionally, the banks have been the largest category of investors in G-secs accounting for more than 60% of the transactions in the Wholesale Debt Market.

Why China buys US debt with Treasury bonds? ›

China invests heavily in U.S. Treasury bonds to keep its export prices lower. China focuses on export-led growth to help generate jobs. To keep its export prices low, China must keep the renminbi low compared to the U.S. dollar.

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