The 2008 data allow us to make some remarks about the possession of the US treasury bills and the financing of the vertiginous growth of the federal debt in autumn 2008. There is no public data available for 2009, my part.
Debt growth was not directly supported in 2008 by the federal bank, sub-federal governments, US companies or insurance companies, which generally retained direct ownership of their shares.
This growth was supported mainly by the growth of the Mutual Funds Mutual Fund (Money Market Mutual Funds) – buying mainly T. Bills (Treasury bills maturing under 1 year). The financing of the growth of shares of mutual funds in the treasury was the fact of households, corporate companies, insurance companies and especially financing companies (funding corporations) bringing together the major players in the broad sense of credit (FRB FFA F-206). The role of mutual funds, investing in treasury bills, has been negative.
Among the savings institutions, the Credit Unions, the State-Supported Enterprises (GSE such as Fannie Mae, Freddie Mac, Ginnie Mae, etc.) and the securitized debt issuers, these are the Brokers and dealers, that is, Treasury stockbrokers who hold a very large share of treasury bills for their client. The estimate of the funds they hold varies greatly from one source to another.
It remains private and public pension funds and households. Their contribution is not small, but it is modest compared to that of mutual funds.
Two conclusions can be drawn from this brief review.
1 ° The financing of the growth of Treasury securities issues is in the US indirect since it is dominated by mutual fund shares and securities held by brokers and dealers. The ultimate strength of US debt financing is therefore difficult to assess because of the multitude of indirect holders of mutual fund units or security buyers registered with brokers. The fragmentation of the possession of securities held directly or indirectly further complicates matters.
2 ° The lack of data in 2009 does not simplify the problem. We can anticipate that the role of American households in the direct and indirect financing of debt should be strengthened. They continued to save this year.
The Federal Reserve has already regained a greater role due to the repurchases of securities is made in 2009. The sub-federal governments should see their volume of title treasure increase because of their current financial difficulty. Pension funds will continue to buy Treasury securities because of the flight to quality benefiting Treasury securities. Businesses and commercial banks are unlikely to significantly increase their direct holdings Mutual fund shares and brokers should, therefore, continue to provide the bulk of debt support with their multitude of unitholders. However, they do not say that their role is always very positive for Toystheater debt consolidation since mutual fund units invest primarily as short-term debt.
This concentration of debt is not without advantage for the Treasury. The more the debt is bought by brokers or fund managers, the less it depends on the reactions of many holders, which gives it a solid foundation at least as far as its management is concerned. This positive remark does not call into question the fact that the holders of these funds’ shares can make decisions detrimental to the sustainable financing of the American debt.