US Debt Monster:
The Fed has two separate sections in their 'Flow of funds' report:
federalreserve.gov
* one for the "flows" -- the new debts added in each period, and
* one for the "levels" -- the accumulation of debts in this country.
Go down to page 52 in their report (page 57 of the .pdf file). At the top of the page, you should see Table L4, "Credit Market Debt, All Sectors, by Instrument."
Debt Size on 12/31/03
Open market paper $1,293.1 billion
U.S. government securities 10,104.2
Municipal securities 1,899.4
Corporate and foreign bonds 6,840.4
Bank loans n.e.c. 1,292.4
Other loans and advances 1,514.7
Mortgages 9,465.4
Consumer credit 2,039.7 billion
Total $34,449.2 billion
U.S. GOVERNMENT SECURITIES: $10,104 billion ($10.1 trillion). You've probably heard that the federal debt is only $6 trillion. So what accounts for the extra FOUR TRILLION dollars in U.S. government securities outstanding? It's all of the government-sponsored agencies, which, according to former Federal Reserve Chairman Volker, might one day wind up back in the lap of the federal government.
Big problem: With interest rates rising, the government is going to have to roll over these debts at a higher and higher interest rate, incurring bigger interest costs, and adding still more to the federal debt.
MORTGAGES: $9,465 billion ($9.5 trillion). As you can see, this is almost as big as the total government debt itself, raising two critical questions:
First, who has gotten most of the money from these mortgages? According to another table in the Flow of Funds, it's not commercial real estate owners. They owe only $1.5 trillion. Nor is it multi-family dwellings, who owe only about a half trillion. And it certainly isn't farmers, who owe a meager $132 billion on their mortgages.
The big debtors are -- you guessed it -- the owners of single-family homes, who owe a grand total of $7.3 trillion on their mortgages. That's more than the total amount of U.S. Treasury securities outstanding. And it's one heck of a debt burden, especially when you consider surging oil prices and soaring interest rates. |
