Who is the largest holder of U.S. debt?
We are by a mile.
From CNBC:
As the U.S. government spends an unprecedented amount of money to fix the 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, government bills, notes and bonds are considered safe because they have a guaranteed rate of return, based on faith in future U.S. tax revenues. The government has been partially funding operations via Treasury securities for decades.
The current national debt is around $15 trillion. And who owns $6.3 trillion (42%) worth of I.O.U.s?
The Federal Reserve.
China was a DISTANT second with $1.3 trillion.
If we add up all the domestically held savings bonds, U.S. pension/mutual fund holders, U.S. banks, and state and local governments, I would estimate America owes 50% of its debt to itself.
While I can't cite a specific economic law this is breaking, it seems to run against the iron-clad rule of TANSTAAFL: There ain't no such thing as a free lunch.
Perhaps more knowledgeable Kossacks can explain to me why this is not disturbing, or why it is catastrophic?