June 18, 2008

Myth: We owe all our debt to China

Previously I discussed the myth that we buy "everything" from China and this is a related myth.

Myth: We owe all our debt to China

People believe that we are amassing a giant debt to China. In actuality only a small % of our public debt is owed to China.

According to the current Federal Debt summary bulletin, the total Federal Debt is $9.4 Trillion. $4.1 Trillion is owed to the government. $5.3 Trillion is owed to the public. Of the public debt most of it is owed to US citizens.

According to the US Treasury which publishes list of Foreign holders of US Treasuries, China currently owns $490 Billion in US Treasuries. Japan owns more of our debt than China with over $600B. Overall Foreign holdings of US Treasuries total over $2.5 Trillion.

Reality: China only owns about 5% of our outstanding federal debt. Most of the US debt is owed to the government itself and US residents.

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