United States’ wealth is represented through the means of its national income in totality. However, the U.S. government owes a lot to numerous instruments of debt – givers that have helped them maintain a functioning U.S. treasury.
America has always been under the debt. Depending on the given political and social circumstances, America has carried fluctuating amounts of debt since the 18th century. For instance, the Civil War and other major wars in and after 1860 had brought about a serious rise in the debt amount and what’s more? The debt has been steadily rising ever since.
From about $10 trillion in 1940, it has risen to $18 trillion in 2009. The project amount of the American debt predicted over the span of the next few years stands equal to the total amount of U.S. GDP.
There isn’t any one specific nation that holds America’s debt. There are several, for instance; China holds $798.9 billion, Japan holds $746.5, while the United Kingdom holds $230.7 billion, similarly Brazil holds $156.2 billion. Hong Kong holds almost $142.0 billion and Russia holds $122.5 billion of the American debt. The list also includes many other nations such as Switzerland, Canada, France, Singapore and Mexico among others.
However, this is something that we all are aware of. What we remain aloof from is the fact that even Social Security Trust Funds owns most of the U.S. debt. There are two clear divisions in the types of debts. First of all, being Intra – governmental holdings.
Intra – governmental can be referred to as the debt held by the federal agencies. In simpler words, this is as good as owing money to itself. There are several trusts that fall under this category who hold the majority of the American debts, including; Federal Disability Insurance Trust Fund, Military Retirement Fund, Medicare, Social Security Trust Fund among others.
Other division can fall under the category of the debt held by the public. This includes foreign governments and investors. This is what was spoken about in the former part of this article. What also falls under this category are institutions such as mutual fund companies, banks, insurance companies, U.S. savings bonds and others.
China and Japan are the largest foreign holders of America’s debt. Naturally, they want the value of the dollar rate to remain high when it comes to comparing it to their currency. Not only does this help the their export segment in America, but it gives a push for their economies to grow, as well. China replaced the United Kingdom in 2007 when it increased its holdings to $699 billion, thereby outpacing UK’s $640 billion mark.
The Bureau of International Settlements even believe that all the three fronts of the sovereign wealth funds and hedge funds don’t want to reveal where they stand on holding America’s debt. However, both the leading countries holding America’s most amount of debt are quite happy to be America’s biggest foreign bankers, nonetheless.