Fed Has Bought More U.S. Gov’t Debt This Year Than Treasury Has Issued

February 7, 2013 - 5:46 PM
Ben Bernanke

Federal Reserve Chairman Ben Bernanke (AP Photo/Alex Brandon)

(CNSNews.com) - So far this calendar year, the Federal Reserve has bought up more U.S. government debt than the U.S. Treasury has issued.

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. 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.

By the close of business on Wednesday, Feb. 6, according to the U.S. Treasury, the total federal debt had climbed to $16.4799 trillion—an increase of $47.2 billon for the calendar year.

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.

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.

Also last week, the Federal Reserve announced that it “will continue purchasing additional … longer-term Treasury securities at a pace of $45 billion per month.”

If the Fed continues to purchase $45 billion in additional federal debt each month in 2013 it will buy up another $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.

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.