Benn Steil


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Government Debt: Financed by Official Sector

October 7, 2009


This chart shows who financed the massive amounts of debt that the U.S. government issued in the first half of 2009. The total net issuance of treasuries and agencies is shown on the left, and economic sectors are ordered from left to right by the size of their total purchases. Given the federal backing of the GSEs – government sponsored entities such as Freddie Mac and Fannie Mae – it is best to look at the sum of treasuries and agencies rather than treasury issuance alone. Through the first two quarters of 2009, issuance has been financed primarily by official buyers. Official buyers often have motivations other than profit. The Federal Reserve is buying debt as a part of its quantitative easing program, while some foreign central banks are accumulating debt as a function of their currency policy. The Federal Reserve plans to slow and then stop its purchases by the end of the first quarter of 2010. This raises the question of who will replace this source of demand, and at what price.



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Post a Comment 2 Comments

  • Posted by Jeff

    Would someone please share the source of this data. I assume it’s somewhere in the Flow of Funds tables, but I’m struggling to recreate it.

  • Posted by Geographics

    If you use the security tables F.209 for treasuries and F.210 for agencies you can get most of the raw numbers. To find the official subsector look at F.107. The difference between the raw data and what is presented is that the charts are 1H09 annualized while the tables are quarterly annualized.

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