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New record: Federal Reserve owes more than $2 trillion in US debt

Published time: August 20, 2013 18:20
Edited time: August 22, 2013 04:16
Reuters / Enrique Castro-Mendivil

Reuters / Enrique Castro-Mendivil

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 is carrying 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 securities.

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 carried totaled only $1,993,375,000,000.

By comparison, the amount of federal debt held 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 adding up.”

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.


Comments (17)

 

g br 21.08.2013 16:38

this article is misleading. I believe the fed's balance sheet is more than 30 (THIRTY) TRILLION. Meaning, this 2 trillion in US treasuries is a drop in the bucket compared to the 25+ trillion in guarantees, handouts, bailouts and other balance sheet items, which the top 1% stole since 2008 and prior.

30 trillion is far greater than 2 trillion. read the 2010 fed audit people.

 

Salvatore Vitale 21.08.2013 13:19

The rich are keeping this farce going. what happens to there money when the dollar collapses. there answer to the problem is to keep the world using the dollar no matter what the cost.

 

DJM 21.08.2013 10:19

It is both tragic and hilarious to see our politicians desperately trying to do save an economic system that is already finished. Nothing that worked before works now and all their claims about recovery are totally refuted by real-world experience.
Who will be the first political leader to tell the people what the people already know? I feel a little sorry for them though - once the collapse is admitted.....what on earth do they do next?

View all comments (17)
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