Wednesday, February 2, 2011

Fed Passes China in Treasury Holdings (Soon Fed will hold more than China and Japan Combined)

No wonder Geithner called in all the Treasury secretaries for a dinner meeting this past Sunday.

The Federal Reserve has surpassed China as the leading holder of US Treasury securities even though it has yet to reach the halfway mark in its latest round of quantitative easing, according to official figures.

Based on weekly data released on Thursday, the New York Fed’s holdings of Treasuries in its System Open Market Account, known as Soma, total $1,108bn, made up of bills, notes, bonds and Treasury Inflation Protected Securities, or Tips, reports FT.

According to the most recent US Treasury data on foreign holders of US government paper, China holds $896bn and Japan owns $877bn.

And get this. "By June [the Fed] will have accumulated some $1,600bn of Treasury securities, likely tobe in the vicinity of China and Japan’s combined holdings,” Richard Gilhooly, a strategist at TD Securities, told FT.

I hope you are ready for inflation. This is not going to stop anytime soon. Remember, Social Security, which used to buy up to 25% of all Treasury securities is now a net liquidator of them. If not the Fed, then who is going to buy this paper?

We are headed into an extremely dangerous inflationary period.


  1. some China's holding might probably had their money from US as well. As hot money flow into China and thus they are building foreign exchange reserve, they then have no choices but to buy US treasuries...

    Inflation has already been everywhere. The only question is when it will finally appear in the US.

  2. "Remember, Social Security, which used to buy up to 25% of all Treasury securities is now a net liquidator of them."

    Social Security holds no marketable Treasury securities

    Click on "GO" to see tha actual data:

  3. @Jim

    All the SS buys is Treasury securities. From the page you reference:

    "Today all securities held by the trust funds are special issues, but the funds have held public issues in the past."

    Wether thay are "special issue" or not, they are still Treasury securities, that SS will no longer be buying, which means the Treasury will have to find the money somewhere else.

  4. Are the kiddies playing around with their money printing machine again? Oh, how wonderful! Only stupid people work for their "Dollars".

  5. @Bob, how can Social Security be a "net liquidator" of non-marketable securities? Do you mean "liquidating" them in the sense of redeeming them against the federal budget and thereby converting them into normal Treasury debt that then lives on someone else's balance sheet?