Fed Has Bought More U.S. Gov’t Debt Than Treasury Has Issued So Far in 2013

Yes, we understand that it’s only February, but this isn’t exactly a good way to start the new year: The Fed has bought more U.S. government debt that Treasury has issued, CNSNews.com reports.

“On Dec. 31, the total debt of the U.S. government was $16.4327 trillion and then-Treasury Secretary Tim Geithner announced that the government had hit what was then the legal debt limit,” the report reads.

“Last week, however, Congress enacted a law to suspend the federal government debt limit until May 18, 2013, and allow the administration to resume increasing the debt,” the report adds.

As of Wednesday afternoon, total federal debt amounted to approximately $16.4 trillion, up $47.2 billion for the calendar year, according to Treasury.

“At the close of business on Jan. 2, the Federal Reserve had owned $1.661 trillion in U.S. Treasury securities. By the close of business on Feb. 6, it owned $1.7172 trillion—an increase of $51.1 billion for the calendar year,” CNSNews notes.

“Thus, the Federal Reserve’s purchases of U.S. government debt in this calendar year have exceeded the Treasury’s net debt issues by about $3.9 billion,” the report adds.

But wait! There’s more: Treasury also announced last week that it’d continue right along with its $45B-per-month purchases of longer-term Treasury securities.

You know what this means, right?

It means that unless something suddenly changes, Treasury will buy up $540 billion in federal debt this year alone.

“The CBO currently estimates that the federal deficit for fiscal 2013 will be $845 billion. If the Fed were to buy debt at a pace of $540 billion a year, and the Treasury were to issue it at $845 billion per year, the Fed would be buying the equivalent of about 64 percent of all debt the government issued,” CNS reminds us.

“As recently as calendar year 2007, the total debt of the United States increased by only about $549 billion, or roughly equal to the amount of debt the Fed plans to buy this year,” the report adds.

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