Who Bought the $4.5 Trillion Added in One Year to the Incredibly Spiking US National Debt, Now at $27.9 Trillion?

Someone had to buy every dollar of this monstrous debt. Here’s Who. The Fed isn’t the only one. But China continues to unwind its holdings.

by Wolf Richter of Wolf Street

So we’ll piece together who bought those trillions of dollars in Treasury Securities that have whooshed by over the past 12 months.

Tuesday afternoon, the Treasury Department released the Treasury International Capital data through  December 31 which shows the foreign holders of the US debt. From the Fed’s balance sheet, we can see what the Fed bought. From the Federal Reserve Board of Governors bank balance-sheet data, we can see what the banks bought. And from the Treasury Department’s data on Treasury securities, we can see what US government entities bought.

Share of foreign holders falls to 25% for first time since 2007:

In the fourth quarter, foreign central banks, foreign government entities, and foreign private-sector entities such as companies, banks, bond funds, and individuals, reduced their holdings by $35 billion from the third quarter, to $7.04 trillion. This was still up from a year ago by $192 billion (blue line, right scale in the chart below). But their share of the Incredibly Spiking US National Debt fell to 25.4%, the lowest since 2007 (red line, right scale):

Japan (blue line), the largest foreign creditor of the US, reduced its holdings in Q4 by $20 billion, to $1.26 trillion. But compared to a year earlier, its holdings were still up by $102 billion.

China (red line) continued on trend, gradually reducing its holdings. In Q4, its holdings ticked down just a tad, and over the 12-month period fell by $8 billion, to $1.06 trillion:

Japan’s and China’s relative importance in the Incredibly Spiking US National Debt continues to decline, with their combined total ($2.32 trillion) now down to a share of 8.4%, the lowest in years:

Read the rest here….