The United States Federal Reserve has set a new record, but it’s not one exactly worth celebrating. For the first time ever, the Fed owns more than $2 trillion in US debt.
According to the Fed’s latest weekly account, the central bank currently is holding roughly $2,001,093,000,000 in US Treasury securities.
That statistic, first reported by CNS News, was published by the Fed on August 14. One week earlier, the bank reported that it amount of federal debt it owned totaled only $1,993,375,000,000.
By comparison, the amount of federal debt owned by the bank since the start of 2009 and the administration of US President Barack Obama has more than quadrupled. On Dec. 31, 2008 that statistic was less consisted of less than a half-trillion in Treasury securities, but efforts undertaken by the Fed to revive the economy — so called “quantitative easing” — have instead left the bank to bear record amounts of national debt.
China, the second place holder with regards to US debt, was owed $1.2758 trillion by the US as of late June. CNS News reported that only 16.7 percent of the government’s debt is being held by the Fed, and that an additional $5.6 trillion — including the amount held in China — is owned by foreign entities.
Also this week, the Fed announced the results of a study launched to identify any stresses that could cause another economic collapse like what was seen after the 2008 financial crisis.
“A key lesson from the recent financial crisis is that many financial companies simply failed to adequately identify the potential exposures and risks stemming from their firm-wide activities….,” the Fed determined. “But more importantly, many companies failed to consider the full scale and scope of exposures, and to analyze how the size and risk characteristics of their exposures and business activities might evolve as economic and market conditions changed.”
Commenting on the latest numbers, Reason’s Ed Krayewski wrote, “Since the financial crisis of 2008, the Federal Reserve has filled its balance sheet with private assets and public debt through instruments like quantitative easing, and the totals are adding up.”
Taking into account all debts, the US is said to be in the hole to the amount of $16.9 trillion. University of California, San Diego economics professor James Hamilton has laid other claims as of late, though, going on record recently to estimate the real debt owed by the US is closer to a staggering $70 trillion.
“The biggest off-balance-sheet liabilities come from recognition of the fiscal stress that will come in the form of an aging population and rising medical expenditures,” Hamilton told Fox News, adding, “It is worth noting that there are many historical episodes in which off-balance sheet liabilities ended up having quite significant on-balance sheet implications.”
Meanwhile, President Obama is reportedly working alongside banking regulators to issue a status report on the upcoming five-year anniversary of the 2008 financial collapse.