A real eye opener here given the amount of hoopla and teeth gnashing that has occurred of late.

The numbers came via CNBC and are drawn from the US and the Federal Reserve Bank’s Office of Debt Management.

THE LARGEST HOLDERS OF US TREASURY DEBT:

15. Luxembourg $104.2 billion
14. Depository Institutions 107.4 “
13. Russia 119.9 “
12. Insurance companies 126.4 “
11. Brazil 139.8 “
10. Caribbean Banks 189.7 “
9. OPEC nations 191.0 “
8. The United Kingdom 214.0 “
7. US Pension funds 465.4 “
6. States and localities 522.7 “
5. “Other Investors” 629.7 “
4. Japan 711.8 “
3. China (mainland) 776.4 “
2. US Mutual Funds 769.1 “

The numbers pique interest for a number of reasons as the number 1 holder of treasury securities with a number 6 times as large as China and greater than the total of the Caribbean, Brazil, OPEC, United Kingdom, US Pensions,various states and other local entities as well as Japan, China and US mutual funds is….wait for it….. The Federal Reserve!  Ta Da!

Whine away about how wrong this is given that they basically issued it to themselves at the behest of the US Government AND they are getting paid interest.

It makes you realize that a default is probably impossible given the power and influence of the Fed—so we are probably talking inflation or a severe cut in entitlements as a solution to the budget issues. My money is on the former given the history if fiat money over the millennium.