The Foreign Countries Holding the Most U.S. Debt
In the international finance system, U.S. debt can be bought and held by virtually anyone.
In fact, if you hold a U.S. Treasury bond or a T-Bill in your portfolio right now, you are already a creditor to the United States government.
And as you can see in today’s chart from HowMuch.net, foreign countries like China and Japan can also accumulate large positions in U.S. Treasurys, making them significant players in the overall United States debt pie.
U.S. Debt: The Big Picture
The United States federal debt currently sits at $22 trillion, and it’s held by a range of domestic and foreign investors.
|Entity||Debt Holdings||Share of Total|
|U.S. Government and Federal Reserve||$8.1 trillion||36.8%|
|Foreign and international||$6.3 trillion||28.5%|
|Mutual funds||$2.06 trillion||9.4%|
|Pension funds||$0.92 trillion||4.2%|
|State and local governments||$0.69 trillion||3.1%|
|Other investors||$3.18 trillion||14.5%|
As you can see, about $8.1 trillion of debt is held by departments of the U.S. government or the Federal Reserve. This number would include securities sitting in retirement accounts of federal employees, social security trust funds, or any of the Treasurys sitting on the Fed’s balance sheet.
Next, another $7.6 trillion of debt is held by domestic investors. These are marketable securities held by banks, mutual funds, pension funds, insurance companies, and other investors.
While debt held domestically is mostly uninteresting, a bigger question mark is the $6.3 trillion of debt that is owned by foreign countries. After all, couldn’t a country like China “weaponize” its large holdings of Treasury securities as a form of retaliation in the ongoing trade war?
Foreign Owners of the Debt
Internationally, the biggest owners of debt include China and Japan, each with over $1 trillion.
|Rank||Country||U.S. Debt Holdings||Percentage of Foreign U.S. Debt Held (%)|
|#1||🇨🇳 China||$1.11 trillion||17.3%|
|#2||🇯🇵 Japan||$1.06 trillion||16.5%|
|#3||🇧🇷 Brazil||$307 billion||4.8%|
|#4||🇬🇧 United Kingdom||$301 billion||4.7%|
|#5||🇮🇪 Ireland||$270 billion||4.2%|
|#6||🇨🇭 Switzerland||$227 billion||3.5%|
|#7||🇱🇺 Luxembourg||$224 billion||3.5%|
|#8||🇰🇾 Cayman Islands||$217 billion||3.4%|
|#9||🇭🇰 Hong Kong||$206 billion||3.2%|
|#10||🇧🇪 Belgium||$180 billion||2.8%|
|#11||🇸🇦 Saudi Arabia||$177 billion||2.8%|
|#12||🇹🇼 Taiwan||$171 billion||2.7%|
Why does China hold so much of the foreign-owned U.S. debt?
China has accumulated Treasury securities over decades, as part of its strategy to keep its domestic currency from strengthening. Interestingly, the export-heavy nation has reduced its swath of Treasurys in recent months, selling off close to $200 billion of them.
Although China has $1.11 trillion of Treasurys left in reserve, the general consensus is that dumping all of them at once would destabilize the global financial system, having an equally negative effect on China as well.
That said, with foreign nations holding U.S. debt, such a risk will always exist.
While it’s not surprising to see countries like China, Japan, or Brazil on the list of top foreign debt holders, what are places like the Cayman Islands, Luxembourg, or Ireland doing on the list?
Two simple facts help to explain these anomalies.
Firstly, despite having a population of just 60,000 people, the Cayman Islands is a hedge fund capital with over 10,000 funds domiciled there. Luxembourg makes the list for similar reasons, given that it is the European-based tax shelter equivalent.
Ireland, on the other hand, is the overseas headquarters for many U.S.-based tech giants like Facebook or Alphabet. Apparently, these corporations like to hold their overseas profits in highly-liquid Treasurys, rather than paying a repatriation tax to bring the cash back to American soil.
The New Rules of Leadership: 5 Forces Shaping Expectations of CEOs
This infographic delves into five major forces reshaping our world and the new rules of leadership that CEOs should follow as a result.
It’s common knowledge that CEOs assume a long list of roles and responsibilities.
But in today’s world, more and more people rely on them to go beyond their day-to-day responsibilities and advocate for broader social change. In fact, a number of external forces are changing how leaders are now expected to behave.
How can leaders juggle these evolving expectations while successfully leading their companies into the future?
The New Rules of Leadership
This infographic from bestselling author Vince Molinaro explores five drivers reshaping our world that leaders must pay attention to in order to bring about real change.
How is the World Being Reshaped?
Leaders need to constantly stay one step ahead of the transformative forces that impact businesses on a broader scale.
Below we outline five key drivers that are changing what it means to be a leader in today’s world:
1. Transformative Technologies
Over the last number of decades, several technologies have emerged that could either accelerate the disruption of companies, or provide them with new opportunities for growth. According to KPMG, 72% of CEOs believe the next three years will be more critical for their industry than the previous 50 years.
For example, artificial intelligence (AI), can now provide companies with insights into what motivates their employees and how they can help them succeed. IBM’s AI predictive attrition program can even predict when employees are about to quit—saving them roughly $300 million in retention costs.
Leaders must accept that the future will be mediated by technology, and how they respond could determine whether or not their organization survives entirely.
2. Geopolitical Instability
Geopolitical risks—such as trade disputes or civil unrest—can have a catastrophic impact on a business’s bottom line, no matter its industry. Although 52% of CEOs believe the geopolitical landscape is having a significant impact on their companies, only a small portion say they have taken active steps to address these risks.
By being more sensitive to the world around them, leaders can anticipate and potentially mitigate these risks. Extensive research into geopolitical trends and leveraging the appropriate experts could support a geopolitical risk strategy, and alleviate some of the potential repercussions.
3. Revolutionizing the Working Environment
As the future of work looms, leaders are being presented with the opportunity to reimagine the inner workings of their company. But right now, they are fighting against a wide spectrum of predictions around what they should expect, with estimations surrounding the automation risk of jobs ranging from 5% to 61% as a prime example.
While physical, repetitive, or basic cognitive tasks carry a higher risk of automation, the critical work that remains will require human interaction, creativity, and judgment.
Leaders should avoid getting caught up in the hype regarding the future of work, and simply focus on helping their employees navigate the next decade.
By creating an inspiring work environment and investing in retraining and reskilling, leaders can nurture employee well-being and create a sense of connectedness and resilience in the workplace.
4. Delivering Diversity
Diversity and inclusion can serve as a path to engaging employees, and leaders are being asked to step up and deliver like never before. A staggering 77% of people feel that CEOs are responsible for leading change on important social issues like racial inequality.
But while delivering diversity, equity, and inclusion seems to be growing in importance, many companies are struggling to understand the weight of this issue.
An example of this is Noah’s Ark Paradox, which describes the belief that hiring “two of every kind” creates a diverse work environment. In reality, this creates a false sense of inclusion because the voices of these people may never actually be heard.
Modern day leaders must create a place of belonging where everyone—regardless of gender, race, sexual orientation, ability, or age—is listened to.
5. Repurposing Corporations
The drivers listed above ladder up to the fact that society is looking to businesses to help solve important issues, and leaders are the ones being held accountable.
With 84% of people expecting CEOs to inform conversations and policy debates on one or more pressing issues, from job automation to the impact of globalization, CEOs have the potential to transform their organization by galvanizing employees on the topics that matter to them.
For a long time, the purpose of corporations was purely to create value for shareholders. Now, leaders are obligated to follow a set of five commitments:
- Deliver value to customers
- Invest in employees
- Deal fairly and ethically with suppliers
- Support communities
- Generate long-term value for shareholders
Ultimately, these five commitments build currency for trust, which is critical for sustained growth and building a productive and satisfied workforce.
Lead the Future
If leaders understand the context they operate in, they can identify opportunities that could fuel their organization’s growth, or alternatively, help them pivot in the face of impending threats.
But organizations must invest in the development of their leaders so that they can see the bigger picture—and many are failing to do so.
By recognizing the new rules of leadership, CEOs and managers can successfully lead their organizations, and the world, into a new and uncertain future.
3D Map: The U.S. Cities With the Highest Economic Output
The total U.S. GDP stands at a whopping $21 trillion, but which metro areas contribute to the most in terms of economic output?
3D Map: The U.S. Cities With the Highest Economic Output
At over $21 trillion, the U.S. holds the title of the world’s largest economy—accounting for almost a quarter of the global GDP total. However, the fact is that a few select cities are responsible for a large share of the country’s total economic output.
This unique 3D map from HowMuch puts into perspective the city corridors which contribute the most to the American economy at large.
Top 10 Metros by Economic Output
The visualization pulls the latest data from the U.S. Bureau of Economic Analysis (BEA, 2018), and ranks the top 10 metro area economies in the country.
One thing is immediately clear—the New York metro area dwarfs all other metro area by a large margin. This cluster, which includes Newark and Jersey City, is bigger than the metro areas surrounding Los Angeles and Chicago combined.
|Rank||Metro Area||State codes||GDP (2018)|
|#1||New York-Newark-Jersey City||NY-NJ-PA||$1.77T|
|#2||Los Angeles-Long Beach-Anaheim||CA||$1.05T|
|#7||Houston-The Woodlands-Sugar Land||TX||$0.48T|
Coming in fourth place is San Francisco on the West Coast, with $549 billion in total economic output each year. Meanwhile in the South, the Dallas metroplex brings in $478 billion, placing it sixth in the ranks.
It’s worth noting that using individual metro areas is one way to view things, but geographers also think of urban life in broader terms as well. Given the proximity of cities in the Northeast, places like Boston, NYC, and Washington, D.C. are sometimes grouped into a single megaregion. When viewed this way, the corridor is actually the world’s largest in economic terms.
U.S. States: Sum of Its Parts
Zooming out beyond just these massive cities demonstrates the combined might of the U.S. in another unique way. Tallying all the urban and rural areas, every state economy can be compared to the size of entire countries.
According to the American Enterprise Institute, the state of California brings in a GDP that rivals the United Kingdom in its entirety.
By this same measure, Texas competes with Canada in terms of pure economic output, despite a total land area that’s 15 times less that of the Great White North.
With COVID-19 continuing to impact parts of the global economy disproportionately, how will these kinds of economic comparisons hold up in the future?
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