Who is buying all our debt?

The majority buyers of Treasury securities in 2009 were:

 

1. Foreign and International buyers who purchased $697.5 billion.

 

2. The Federal Reserve who bought $286 billion.

 

3. The Household Sector who bought $528 billion to Q3 – which puts them on track purchase $704 billion for fiscal 2009.

 

These three buying groups represent the lion’s share of the $1.885 trillion of debt that was issued by the US in fiscal 2009.

 

…we were surprised to discover that "Households" had bought so many Treasuries in 2009.

 

They bought 35 times more government debt than they did in 2008.

 

With unemployment and foreclosures skyrocketing, who could afford to increase treasury investments to such a large degree?

 

This leaves a very important question - who makes up this Household Sector?

 

…the Household Sector is actually just a catch-all category.  It represents the buyers left over who can’t be slotted into the other group headings…amounts held or owed by the other sectors are subtracted from known totals, and the remainders are assumed to be the amounts held or owed by the Household Sector.

 

So to answer the question - who is the Household Sector?

 

They are a PHANTOM.

 

They don’t exist.  They merely serve to balance the ledger in the Federal Reserve’s Flow of Funds report.

 

…The fact that the Federal Reserve and US Treasury cannot identify the second largest buyer of treasury securities this year proves that the traditional buyers are not keeping pace with the US government’s deficit spending…

 

…2009 has been witness to spectacular government intervention in almost all levels of the economy. This support requires outside capital to facilitate, and relies heavily on the US government’s ability to raise money in the debt market…

 

We are now in a situation…where the Fed is printing dollars to buy Treasuries as a means of faking the Treasury’s ability to attract outside capital…

 

…the regular buyers of US debt are no longer buying…

 

It makes us wonder if it’s all just a Ponzi scheme.

 

Eric Sprott & David Franklin

December, 2009