The United States Federal Reserve has set a new record, but it’s not one exactly worth celebrating. For the first time ever, the Fed owns more than $2 trillion in US debt.
According to the Fed’s latest weekly account, the central bank
currently is holding roughly $2,001,093,000,000 in US Treasury
That statistic, first reported by CNS News, was published by the
Fed on August 14. One week earlier, the bank reported that it
amount of federal debt it owned totaled only $1,993,375,000,000.
By comparison, the amount of federal debt owned by the bank since
the start of 2009 and the administration of US President Barack
Obama has more than quadrupled. On Dec. 31, 2008 that statistic
was less consisted of less than a half-trillion in Treasury
securities, but efforts undertaken by the Fed to revive the
economy – so called “quantitative easing” – have instead left the
bank to bear record amounts of national debt.
China, the second place holder with regards to US debt, was owed
$1.2758 trillion by the US as of late June. CNS News reported
that only 16.7 percent of the government’s debt is being held by
the Fed, and that an additional $5.6 trillion – including the
amount held in China – is owned by foreign entities.
Also this week, the Fed announced the results of a study launched
to identify any stresses that could cause another economic
collapse like what was seen after the 2008 financial crisis.
“A key lesson from the recent financial crisis is that many
financial companies simply failed to adequately identify the
potential exposures and risks stemming from their firm-wide
activities….,” the Fed determined. “But more importantly, many
companies failed to consider the full scale and scope of
exposures, and to analyze how the size and risk characteristics
of their exposures and business activities might evolve as
economic and market conditions changed.”
Commenting on the latest numbers, Reason’s Ed Krayewski wrote,
“Since the financial crisis of 2008, the Federal Reserve has
filled its balance sheet with private assets and public debt
through instruments like quantitative easing, and the totals are
Taking into account all debts, the US is said to be in the hole
to the amount of $16.9 trillion. University of California, San
Diego economics professor James Hamilton has laid other claims as
of late, though, going on record recently to estimate the real
debt owed by the US is closer to a staggering $70 trillion.
“The biggest off-balance-sheet liabilities come from recognition
of the fiscal stress that will come in the form of an aging
population and rising medical expenditures,” Hamilton told Fox
News, adding, “It is worth noting that there are many historical
episodes in which off-balance sheet liabilities ended up having
quite significant on-balance sheet implications.”
Meanwhile, President Obama is reportedly working alongside
banking regulators to issue a status report on the upcoming
five-year anniversary of the 2008 financial collapse.
Republished from: RT