Skip to comments.The Fed and Our Staggering $16.2 Trillion Debt: Increased 132% Since January 2007
Posted on 10/23/2012 3:22:25 PM PDT by whitedog57
The numbers from Treasury Direct are disturbing. When the Democrats came to power in January 2007, the Federal debt held by the public was $4.89 trillion. Today, that figure has risen to $11.35 trillion, a 132% increase!
The Total Public Debt Outstanding was $8.68 trillion in January 2007 and now stands at $16.2 trillion, a 87% increase
Intragovernmental holdings (mostly the Medicare Trust Fund, the Social Security Trust Fund, and Federal Financing Bank securities) rose only 28% since January 2007.
So, the real problem has been the growth in debt held by the public, such as China.
Of course, The Federal Reserve is the largest owner of Federal debt with China second and Japan in third place. The Fed enables fiscal recklessness by buying Treasury debt, so The Fed is part of the budget crisis.
The US 10 year Treasury remains below 2% at 1.757%, but that is almost 100 basis points higher than Japans 10 year at 0.770%. Of course, despite the efforts of the ECB, the PIGS (Portugal, Italy, Greece and Spain) are at 4.854% (Italy) and higher. Low sovereign rates tempt the fates by encouraging MORE debt issuance at low rates.
Clearly, 132% growth since 2007 is NOT sustainable, despite what Paul Krugman and others say. Bernankes printing press will have a heart attack.
The Feds Open Market Committee is meeting today and tomorrow (announcement tomorrow at 2:15pm EST). Watch for them to expand QEternity (MBS) and increase the purchase of agency mortgage backed securities.
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