To our surprise, the only group to actually substantially increase their purchases in 2009 is defined in the Federal Reserve Flow of Funds Report as the “Household Sector”. This category of buyers bought $15 billion worth of treasuries in 2008, but by Q3 2009 had purchased a whopping $528.7 billion worth. At the end of Q3 this Household Sector category now owns more treasuries than the Federal Reserve itself.
So to summarize, the majority buyers of Treasury securities in 2009 were:
Foreign and International buyers who purchased $697.5 billion.
The Federal Reserve who bought $286 billion.
The Household Sector who bought $528 billion to Q3 – which puts them on track purchase $704 billion for fiscal 2009.
These three buying groups represent the lion’s share of the $1.885 trillion of debt that was issued by the US in fiscal 2009.
We must admit that we were surprised to discover that “Households” had bought so many Treasuries in 2009. They bought 35 times more government debt than they did in 2008. Given the financial condition of the average household in 2009, this makes little sense to us. With unemployment and foreclosures skyrocketing, who could afford to increase treasury investments to such a large degree? For our more discerning readers, this enormous “Household” investment was made outside of Money Market Funds, Mutual Funds, ETF’s, Life Insurance Companies, Pension and Retirement funds and Closed-End Funds, which are all separate reporting categories. This leaves a very important question - who makes up this Household Sector?
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Haha.
ReplyDelete'Household sector'
Gotta love it.
In other words, you and I bought the treasuries, with money the government printed up on our behalf.
LOL
But not really.
Thank you Uncle Sam. May I have another?
Granted I haven't fully read the article and I could be wrong, but does the household sector include money in Money Market and retirement Money Market Accounts? Consider that the banks managing cash held in Money Market, Retirement and other accounts is invested in short term UST.
ReplyDeleteI think there could be about $700 Billion in Cash held in these accounts since few people are willing to risk there savings in anything but cash.