• T C Boles
  • September 25 2020

Who Owns America?

Who are the major foreign holders of treasury securities?

Whilst there is much talk of Trump’s new tax cuts adding some $1 trillion to the US national debt, and who is going to be prepared to buy this debt and at what cost; I think there is a fundamental issue that everyone seems to have overlooked. China and Japan may be reducing their sovereign holdings of US Treasuries but that is to miss the point. I am less concerned about who is on the list than who is missing. This seems to me to be fundamental.

  1. Mainland China - 1,176.6
  2. Japan - 1,084.1
  3. Ireland - 328.7
  4. Cayman Islands - 269.4
  5. Brazil - 265.3
  6. Switzerland - 250.9
  7. UK - 237.9
  8. Luxembourg - 218.3
  9. Hong Kong - 194.9
  10. Taiwan - 179.9

The countries making up the top two places are those with the largest trade surpluses into the US- no surprises there. But Ireland in third place? Now come on- this is an anomaly. Is this composed of all those 700 US conglomerates with Dublin HQs- Facebook, Amazon, and Microsoft and similar? (Google are shortly to move to Portugal from Jersey I gather). Does this show the power of these businesses in that they are able to vie for position with actual Sovereign Countries in buying up debt? The same goes for Cayman Islands- surely all corporate rather than sovereign monies? And the UK dragged into 7th place bested by Switzerland (I’ll bet more corporate money) and Brazil.

So who is missing? Which country has the second largest trading surplus with the US? Clearly the Bundesbank must have its hands full of Euro (Greece) debt. Huge surprise that Germany is nowhere to be seen and nor is Saudi Arabia- where have all those petrodollars gone? Not to mention Norway with the largest Sovereign Wealth fund, are they absent by design?

If I were that new guy who has taken over from Yelland at the Fed- I would be seeking answers. What’s wrong with our debt/currency that the risk averse Germans don’t want to know? Don’t the Germans know that the USD$ is the world’s reserve currency . . . at least for now?