Despite not even reaching the halfway mark of its latest round of bond-buying, the Financial Times is reporting that the Federal Reserve has surpassed China as the world's largest holder of US Treasury securities. (link below)
Based on weekly data released on Thursday, the New York Fed's holdings of Treasuries in its System Open Market Account, known as SOMA, total $1.108bn, made up of bills, notes, bonds and Treasury Inflation Protected securities, or TIPS.
According to the most recent US Treasury data on foreign holders of US government paper, China holds $896 bn while Japan owns $877bn.
The article quotes TD Securities strategist Richard Gilhooly:
By June [the Fed] will have accumulated some $1,600bn Treasury securities, likely to be in the vicinity of China and Japan's combined holdings."
We wish we could feel some sense of pride about this #1 ranking. Unfortunately, what would make us proud continues to get kicked down the road: namely a return to policies that focus incentives on competition instead of consumption. In fact (since we mentioned it), we wholeheartedly embrace and support the President's State of the Union reference to "out-innovate, out-educate and out-build" other nations.
Yet we hasten to point out that we can not do this so long as government policies are obsessed with incenting citizens to out-consume the rest of the world.
Fed Passes China in Treasury Holdings
Michael Mackenzie
Financial Times
February 2, 2011
PS - Don't you find it silly that UK journalism still refuses to acknowledge the existence of the number "trillion"? They continue to insist on referring to a trillion as $1,000bn. Sheesh.
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