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Word Count: 470
Debt is a vast problem in the United States Our debt is through theroof and it needs to be controlled before something dreadful happensThe US national debt is the sum of all outstanding debt owed by theFederal Government It surged past 17 trillion on October 172013Unfortunately debt is not being controlled very cautiously and theAmerican public should be very concerned The three leading debt holdersinclude Social Security Trust Funds The Federal Reserve and ChinaSocial Security Trust Funds is the most immense debt holder in theUnited States These hold 27 of our debt These funds serve twopurposes 1 they provide an accounting mechanism for tracking allincome to and disbursements from the trust funds and 2 they hold theaccumulated assets Some agencies like the Social Security Trust Fundtake in more revenue from taxes than they need right now Rather thansave this cash these agencies buy US Treasuries with it This effectively transfers their excess cash to the general fund whereit can be spent Of course one day they will redeem their Treasurynotes for cash The Federal government will either need to raise taxesor issue more debt to give the agencies the cash they will need Thiswill make the debt even higher and will raise the Americans taxesThe Federal Reserve is in charge of the countrys credit so it reallydoesnt have a financial reason to own Treasury notes Thats when itbegan its program of Quantitative Easing It stimulated the economy toescape the grips of the 2009 recession by purchasing more Treasurynotes This stoked demand for Treasuries and kept interest rates lowWithout high interest rates they will continue to use this methodmaking debt higher and having no consequences They hold 17 of ourdebt China is the third biggest debt holder in the United StatesHolding 16 of our debt China has increased its holdings from 1147trillion in the last year Its obviously not too concerned that theUS will default on its debt China wants to keep the value of thedollar
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