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Magazine calls china ownership a myth while admitting FEDERAL LAW!

by seasoned
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4. China's Ownership of U.S. Debt Called a 'Myth'

The widely held belief that China "owns" the United States because it has accumulated a large percentage of America's outstanding debt is a "myth," according to a report from the Cato Institute.

"The myth is that the Chinese own a large amount of the public debt of the United States and are continuing to add to the debt in large amounts each year," writes James A. Dorn, editor of the Cato Journal.

"The reality is that the Chinese own a very small amount of the debt."

At the end of 2011, when America's gross public debt stood at $14.3 trillion, China's holdings amounted to just $1.2 trillion, or 8.4 percent of the total.

Foreign holdings excluding China stood at 22.4 percent, and domestic holdings at 27.3 percent.

But the largest percentage of debt was held by the Social Security Trust Fund and the Federal Reserve: 39.9 percent or $5.7 trillion.

The Federal Reserve in fiscal 2011 was the largest buyer of new U.S. Treasury debt, acquiring 77 percent.

The fact is, China's holdings of American debt equal barely more than a third of its total foreign exchange reserves.

The real cause of the U.S. debt crisis -- debt had risen to more than $16 trillion at the end of last year -- "is overspending and an explosion in entitlements, especially Medicare and Medicaid," says Dorn, a professor of economics at Towson University in Maryland
GOT THAT! Chinas holdings are "ONLY" "8.4%" of the total which means the NORMALIZED holding is "only" about "13.98%". WHY? Because 39.9% is DECLARED to be held by Social security, AS REQUIRED BY FEDERAL LAW, but clearly isn't, because it has become a ponzi scheme, and is constantly gutted. Borrowing from yourself, when you have no money, just DOES NOT WORK!

And who owns the undeclared 30% or so? If it is "the fed", then chinas percentage is even HIGHER(about 27.27%)! I mean it would be GREAT to offer another 16trillion of debt and simply hold it, and claim china suddenly owned so much LESS, but that just DOES NOT WORK!

Steve
  • Profile picture of the author Kay King
    16.7% US Social Security Trust Fund
    10.8% US Federal Reserve
    5.6% US Civil Service Retirement Fund
    2.4% US military Retirement Fund

    8.1% China and Hong Kong
    7.0% Japan
    1.7% oil exporter countries
    1.6% Brazil
    0.9% United Kingdom

    15% other foreign nations
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    • Profile picture of the author seasoned
      Originally Posted by Kay King View Post

      16.7% US Social Security Trust Fund
      10.8% US Federal Reserve
      5.6% US Civil Service Retirement Fund
      2.4% US military Retirement Fund

      8.1% China and Hong Kong
      7.0% Japan
      1.7% oil exporter countries
      1.6% Brazil
      0.9% United Kingdom

      15% other foreign nations
      Well, I think this is interesting! ***I*** thought it was a "TRUST FUND". Every government budget I have ever seen(I looked at a few since #$%^& where PEOPLE said otherwise) said "TRUST FUND". YOU say "TRUST FUND" yet many politicians LAUGH at the prospect! I have to wonder about the "retirement funds". And the "FEDERAL RESERVE" is a JOKE! As I said, you can NOT loan yourself money!

      X-X=0!
      X-(X*Y)=<0!

      So it is AT BEST a zero sum gain. So you might as well forget such things. If social security were REALLY treated seriously, the money would be paid in by others and only interest would be paid out. It ISN'T taken seriously, so a 4% bond may pay say 102% meaning that that 100% is taken from future generations, and they reduce the payout. THAT s why social security is insolvent!

      HECK, they claimed they wouldn't raise INCOME taxes on lower and middle class earners, so they raised SOCIAL SECURITY! What do they care, ether is used as if it were theirs. They still call it "revenue".

      Steve
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  • Profile picture of the author Thomas
    Small percentages can have big consequences.

    If I had "only" 8.4% of the shares in a large corporation and suddenly tried to sell all of them at the same time, there would be an almost-instant ripple effect that would probably bring down the whole company.

    At the beginning of it's financial crisis, Greece's GDP contracted by "only" 6%, but it was enough to drive over 100,000 companies out of business, and push unemployment to nearly 20%, and force the country into a bailout situation.

    Somehow, I don't think that, if the Chinese suddenly dumped all their US debt, anyone would be saying, "Oh, it's fine... they "only" have 8.4%... no big deal!".
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    • Profile picture of the author Kay King
      I agree - and China has it's own economic bubbles right now. They have a huge real estate bubble and have manage to let a bit of air out but prediction by economist is the bubble will burst at some point in China.

      I don't think the risk is as much about having debt called as it is of having other countries not willing or able to take on more of our debt. Exposing civil and military pensions to the risk of carrying more of this debt is a fool's game to me.

      It's like a huge bank issuing risky loans and then buying back it's own bad debt and saying "we're solvent" until they can't hide the truth any longer.
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