In the course of a longish blog post at Econoblog Angry Bear with a similar title http://angrybearblog.com/... I developed an interesting series of numbers that kind of turn the typical Austerian 'We are drowning our grandchildren in a sea of DEBT!!" narrative on its head. All links at the AB post:
Total Public Debt: $17.4 trillion
Intragovernmental Holdings: $4.9 trillion (including $2.8 trillion in Social Security Trust Funds
Debt Held by the Public: $12.5 trillion
Treasury holdings of the Feds SOMA (System Open Market Account): $2.2 trillion (along with another $1.6 trillion of Federally backed instruments)
Of Debt Held by the Public:
Treasury Bonds (20 or 30 year): $1.46 trillion
Treasury Notes (1-10 year): $8.03 trillion
Remainder in short term Bills and TIPS
Point of Interest no. 1: U.S. Long Term Debt, defined as instruments with more than 10 years is right at $1.5 trillion out of $17.4 trillion or 8.6% of the total. More points and the implications of this one under the Orange Crueller
Repeating a number:
Treasury Holdings of the Federal Reserve System Open Market Account (in large part the result of three rounds of Quantitative Easement, i.e. buying Federally backed instruments)
$2.2 trillion Bonds and Notes
$1.8 trillion Other
Bonds (20 and 30 years) and Notes (1 to 10 years) are included together under one tab showing all issues. But it is pretty easy to tell them apart by their rates and maturities. Obviously issues maturing 11+ years from now are Bonds, and rates above 6% are almost certainly the same issued before the 2008 crisis.
Running down the column that reports Coupon Rates and comparing it to the column % of Total Outstanding we see that for Bonds maturing from 2018 on the Fed's share of the issues outstanding range from 58% up to an apparent self-imposed ceiling of 70%. If for the current purposes we split the difference we can conclude that the Federal Reserve holds just under 2/3rds of ALL Long Term Debt or 64% of $1.46 trillion = $934 billion. In turn this means that all non-U.S. government actors combined hold in round figures $500 billion in such Debt. A lot yes but somewhere around 3% of the total $17.4 trillion the Austerians claim represents "mortgaging our children's future to the Chinese Central Bank".
Okay that is Principal. But how about Debt Service. Well another Treasury website gives us average interest rates as follows:
All Marketable: 2.007%
But let us remember that the Feds hold up to 70% of those Bonds with a concentration on the older and higher Coupon Rate ones. And since the Fed rebates its profits to Treasury that means that the effective Coupon Rate on bonds held by non-Federal holders is even less than that 2.007% average of All Marketable. How much less would be hard to calculate but it certainly means that the U.S. is paying all such holders something less than the 2.0% Fed Inflation target. That is on average across all categories.
Well that is a blizzard of numbers. But what it does show that claims that we have sold our Grandchildren into Debt Servitude to the Chinese are a bunch of hooey. While it is true that Foreign Holders of U.S. Treasuries combine for $5.8 trillion (another number snowflake) they are only splitting with all U.S. bond investors outside the Fed a roughly $500 billion pot of long term debt. With all the rest of it in instruments carrying rates that are in Real Terms Zero in relation to the Feds Inflation target and negative in relation to what most people consider the 'natural' rate of inflation.
The various rounds of Quantitative Easing carried out by the Fed may not have jump started the economy quite in the way intended. But they sure as hell sopped up most of the pool of high-yield Long Bonds out there. Which fact has some interesting implications, but ones I am having a tough time getting my professional Economist friends discussing.