The Biggest Holders of US Government Debt

Source: US Treasury, US Federal Reserve & US Office of Debt Management // Photo: Simon Law As the US government spends an unprecedented amount of money to fix the nation's economy, there is an equally great need to raise the cash to pay for it. This is accomplished through borrowing, whereby Uncle Sam sells Treasury securities of varying maturity.For investors, the government bills, notes and bonds are considered a safe financial product because they have a guaranteed rate of return, based on faith in future US tax revenues. The government has been partially funding operations via Treasury securities for decades. This borrowing adds to the national debt, which has climbed above $11 trillion and is rising every day. Much of that debt is held by private sector, but about 40 percent is held by public entities, including parts of the government.  Here's who owns the most.By Paul ToscanoUpdated 27 Aug 2009

Photo: Claude Wians A country slightly smaller than Rhode Island currently holds $104.2 billion in US government debt. Over the past 12 months, Luxembourg’s holdings have ranged between $87.2 billion and  $104.7 billion.

As of the fourth quarter of 2008 (the most recent numbers currently available), the Federal Reserve Board of Governors lists depository institutions as holding approximately $107.3 billion in US debt. This group includes commercial banks, savings banks and credit unions.

Photo: Maticulous Russia's investment in US debt grew over 393 percent between January 2008 and March 2009(from $35.2 billion to $138.4 billion), but the country's investment in US debt has receded since, and is listed at $119.9 billion as of June 2009. This is approximately at the same level it was in January 2009.

Photo: Sylvain Leprovost According to the Federal Reserve Board of Governors, insurance companies hold $126.4 billion in Treasury securities. This group includes property-casualty and life insurance firms.

Photo: AP The South American economic giant has $139.8.5 billion in holdings, according to the Treasury. Brazil’s investment into US debt has been fluctuating slightly over the past year, with a high of $158 billion in June 2008, and a low of $126 billion in March.

Photo: Wendy Twodolla The US Treasury identifies this group as institutions in the Bahamas, Bermuda, the Cayman Islands, Netherlands Antilles, Panama and the British Virgin Islands. Holdings are currently listed at $189.7 billion, up from $106.6 billion in June 2008, but off the group's high of $213.6 billion in March.

Photo: AP Big oil means big money... and big investment into US debt. Included in the group of oil exporters are Ecuador, Venezuela, Indonesia, Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, the United Arab Emirates, Algeria, Gabon, Libya, and Nigeria. The group combines for a total of $191 billion, up from $159.5 billion one year earlier.

Photo: Martin Talbot Britain currently holds $214 billion in US debt, but the country's investment has fluctuated dramatically throughout the past 2 years, ranging from as much as $271.2 billion in May 2008, but to as low as $55 billion in June 2008.

Pension funds control large amounts of money, reserved for personal retirements, and thus are obligated to make relatively safe investments. This group includes both private and local government pension funds, totaling $456.4 billion. The private pension fund category also includes US Treasury securities held by the Federal Employees Retirement System Thrift Savings Plan "G Fund."

Photo: Cliff1066 US state and local governments have over a half-trillion dollars invested in American debt, according to the Federal Reserve. The level of investment has remained very stable over the past three years, moving within the range of $516.9 billion and $550.3 billion from 2006 to 2009.

Photo: Dan Perry Although the most recent numbers for this category are from December 2008, this extremely diverse group includes individuals, government-sponsored enterprises, brokers and dealers, bank personal trusts, estates, corporate and non-corporate businesses for a total of $629.7 billion. Interestingly, the level of investment from "Other" investors has more than doubled from June 2008-December 2008, the largest 6 month swing for this group in the past 10 years.

Photo: AP Another major US trade partner, Japan holds a huge amount of the country’s debt, with a stunning $711.8 billion. As recently as August 2008, Japan held the more US debt than any other country, but currently holds the #2 spot, as far as foreign governments are concerned.

Photo: AP The buzz word in the market for US debt is China. The world’s most populous country is also the largest and most important international buyer of US debt. From June 2008 to it's all-time high in May 2009 of $801.5 billion, China had raised its stake in US debt by over $266 billion. Receding back to $776.4 billion in June, China’s holdings were still up $241.3 billion from a year earlier. Hong Kong, which is not included in China's total, holds an additional $99.8 billion.

According to the Federal Reserve, mutual funds hold the second largest amount of US debt compared to any other group. Including money market funds, mutual funds and closed-end funds, this group of investments manages approximately $769.1 billion of US Treasury securities.

Photo: William Warby That’s right, the biggest holder of US government debt is actually inside the United States. The Federal Reserve system of banks and other US intragovernmental holdings account for a stunning $4.785 trillion in US Treasury debt. This is the most recent number available (March 2009), which is down from the all-time high of $4.806 trillion in December 2008. However, this does not account for additional Federal Reserve investments occuring in the summer of 2009. About a decade ago, the total government holdings were "only" $2.5 trillion.Replay SlideshowWorld's Safest Banks 2009Biggest US Welfare StatesThe Most Recession-Resistant Cities

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