Unexpectedly Intriguing!
20 October 2020

As of the end of its 2020 fiscal year on 30 September 2020, U.S. government's total public debt outstanding stood at $27,026,921,935,432.41 ($27.027 trillion). One year earlier, it stood at $22,622,684,674,364.43 ($22.623 trillion). During the year in between, the total U.S. national debt rose by $4.404 trillion.

Earlier this year, we found the U.S. Federal Reserve had become the U.S. government's new sugar daddy. As of 30 September 2020, we find that the Federal Reserve directly holds over $4.445 trillion in U.S. Treasury securities, up $2.338 trillion from the $2.108 trillion it held a year earlier. Uncle Sam's new friendly neighborhood loan shark lent 47% of all the dollars the government borrowed during its 2020 fiscal year.

As a result, the Fed's share of all the money borrowed by the U.S. government increased from 1 out of every 8 dollars the government has borrowed to 1 out of every 6 dollars. If we just focused on the publicly-held portion of the national debt, the Fed's share would increase to 1 out of every 5 dollars borrowed.

In becoming the U.S. government's primary creditor, the Fed has widened its margin over Uncle Sam's former top lender, Social Security's Old Age and Survivors Insurance Trust Fund, which has only loaned the U.S. government 1 out every 10 dollars it has borrowed.

The following chart tallies the shares of money the U.S. government has borrowed from its major worldwide creditors. Please click here to access the full size version of the chart.

FY 2020: To Whom Does the U.S. Government Owe Money? (Preliminary Estimate)

With the Fed having taken such a dominant lender role in financing the U.S. government's spending, the relative share of money borrowed from foreign entities has decreased. That share has fallen from 30% of the total public debt outstanding in 2019 to 26% in 2020. Japan has become the largest foreign creditor to the U.S. government, as China seeks to reduce its holdings of U.S. government-issued debt.

We had to wait until the U.S. Treasury Department issued its September 2020 monthly treasury statement some four days late on 16 October 2020 to get the latest debt holdings for Social Security and other trust funds operated by the U.S. government. The data for major foreign holders of U.S. government-issued debt is preliminary (or rather, only up-to-date through August 2020) and will be subject to revision over many months ahead.

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