Drowning in debt may collapse currency

Fed Chairman Ben Bernanke

Fed Chairman Ben Bernanke

CNSNews.com posted a fascinating summary (assuming appreciation of economics) on the national debt.  In short, the U.S. Federal Reserve now owns more public debt that has been held by the nation from George Washington through Bill Clinton and they are not slowing down or tapering off in what CNSNews.com calls the “Quantitative Explosion.”

The CNSNews.com review posted September 22 focuses on plans by the Federal Reserve’s Federal Open Market Committee announced the week before that the Fed would continue to buy $40 billion in mortgage-backed securities (MBSs) and $45 billion in U.S. Treasury securities per month.

EconomicDebtAt that time the “Fed also released its latest weekly accounting sheet indicating that it had already accumulated more Treasuries and MBSs than the total value of the publicly held U.S. government debt amassed by all U.S. presidents from George Washington though Bill Clinton,” wrote CNSNews.com adding that since the beginning of September 2008,the Fed’s ownership of Treasury securities and MBSs has increased seven fold.

CNSNews.com writes:

The U.S. Treasury divides the U.S. government debt into two parts: debt held by the public, which includes publicly traded Treasury securities such as Treasury bills, notes and bonds, and intra-governmental debt, which is money the Treasury has borrowed out of the Social Security trust fund and other government trust funds and then used to pay current expenses.

BenBernanke2As of the opening of business back on Nov. 23, 2001, according to the Daily Treasury Statement, the federal government’s total debt held by the public was $3,383,605,000,000. (By the close of business that day, the total debt held by the public would increase to 3,406,661,000,000.) The $3,383,605,000,000 in U.S. Treasury debt held by the public as of the morning of Nov. 23, 2001, represented the total publicly held debt the federal government had accumulated until that date from the moment the Treasury first opened during the presidency of George Washington.

The $3,383,605,000,000 the Treasury owed to the public as of the morning of Nov. 23, 2001 was less than the $3,391,826,000,000 in Treasury and mortgage-backed securities owned by the Federal Reserve as of the close of business last Thursday.

Thus the Federal Reserve now owns more debt in the form of U.S. Treasury securities and MBSs than the sum total of the publicly held debt that the U.S. government accumulated from George Washington’s administration into November 2001, during President George W. Bush’s first term.

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