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Fed’s Bought More Debt Than Treasury Issued

From CNS News:

Fed Has Bought More U.S. Gov’t Debt This Year Than Treasury Has Issued

By Terence P. Jeffrey | February 7, 2013

(CNSNews.com) – So far this calendar year, the Federal Reserve has bought up more U.S. government debt than the U.S. Treasury has issued…

By the close of business on Wednesday, Feb. 6, according to the U.S. Treasury, the total federal debt had climbed to $16.4799 trillion—an increase of $47.2 billon for the calendar year.

At the close of business on Jan. 2, the Federal Reserve had owned $1.661 trillion in U.S. Treasury securities. By the close of business on Feb. 6, it owned $1.7172 trillion—an increase of $51.1 billion for the calendar year.

Thus, the Federal Reserve’s purchases of U.S. government debt in this calendar year have exceeded the Treasury’s net debt issues by about $3.9 billion…

Does this mean we are buying our own debt with printed money? How does work?

The CBO currently estimates that the federal deficit for fiscal 2013 will be $845 billion. If the Fed were to buy debt at [its current] pace of $540 billion a year, and the Treasury were to issue it at $845 billion per year, the Fed would be buying the equivalent of about 64 percent of all debt the government issued…

If true, this is quite mind-boggling. (And to think, some people say the Federal Reserve has too much power.)

But at the very least, it probably indicates that that foreign countries aren’t too eager to buy our debt anymore.

This article was posted by Steve on Friday, February 8th, 2013. Comments are currently closed.

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