Home > The Economy > Who owns the public debt?

Who owns the public debt?

from Jonathan Nitzan

While soaring public debts have been front and centre in both the popular media and academic discussion, there is surprisingly little analysis of who owns those debts. One exception is the work of Sandy Hager, a postdoctoral fellow at the Harvard Weatherhead Center for International Affairs. Hager’s PhD dissertation dissected the personal and corporate ownership of the U.S. public debt, showing a remarkable degree of concentration.

The chart below, taken from his 2013 article in New Political Economy, shows the share of the U.S. public debt held by the Top 1%. This share follows the general historical contours of the overall distribution of wealth, and is currently hovering around 45% – approximately the same level as at the turn of the twentieth century. 


Equally startling is the extreme concentration of debt holdings by corporations. The enclosed table, taken from Hager’s 2015 paper in Socio-Economic Review, shows that, in the first decade of the millennium, 2,675 firms – representing a tiny 0.05% of all corporations – owned a whopping 82% of the public debt held by corporations. This concentration is significantly higher than it was in the 1950s, when a similar number of firms, representing 0.2% of all corporations, owned 66% of the debt held by corporations.


Although the full implications of these findings are yet to be explored (Hager only begins to do so in his work), it seems clear that any analysis of public debts has to take them into account.


The Scientist and the Church

Shimshon Bichler and Jonathan Nitzan

  1. Kihano
    July 18, 2015 at 8:42 pm

    Did someone actually expect something else? It is obvious that all debt, including the public one is held by the richest people. The economics is not a science, it is a class ideology. That is why it “discovers” the obvious so often and fails in prediction even more often. Economics treats the mone as a mean of exchange. It is however not only a mean of exchange. Once won as a profit, money almost newer change their owner unless he gets losses. For richest people and corporations it is not easy to have big enough losses, so that the money rarely change they owner.

  2. July 19, 2015 at 2:29 am

    Well I was a little surprised, I’d have expected debt to be mainly parked at domestic and foreign central banks, and the rest in private banks whose deposits exceed loans for some reason. I’d expect the 1% to own higher-yielding assets. Public debt is really money parked, unless we’re talking about risky high-yield debt.

    In the Keynsian ever-expanding model “debt” is a stock of money that’s a bit less liquid and whose inflation rate is very close to zero, or a point or two less than regular money. Instead of all money inflating at 0.5%, cash inflates at 1% and debt at 0%. The state transfers seignorage gains from inflation to bond holders as interest.

    Ownership by the 1% might explain recent rightwing alarm about US or UK debt. Mounting debt is not a problem for a sovereign, it’s a problem for the investor in debt as any crisis of confidence will cause a spike on inflation and yield a real loss. I guess Europe has gracefully solved this problem by imposing real losses on many of its economies for several years.

    • Lyn Eynon
      July 19, 2015 at 8:37 pm

      Looking at the graph there appears to be a pattern in which the weighting of the total assets of the 1% swings away from public debt in periods of growth and towards it in times of crisis. This could be explained by risk aversion, similar to that being shown in corporate reluctance to invest rather than using cash piles for dividends or share buybacks.

  3. antireifier
    July 19, 2015 at 5:37 am

    I have maintained, without empirical evidence unfortunately — not being an economist — that the rise in national debts, the number of negative comments about politicians and civil servants (governments), the growth of inequality and a number of other indicators all follow the same curve as the ones in this article. The latest Conservative budget in Canada transfers $25.7 billion from tax payers to the wealth class –1% — maybe 10% — as interest on the debt. In recent years the annual transfer has been closer to $29 billion. People as prompted by the corporate owned media get exercised because they see debt as a burden but in reality it is way to transfer money from taxpayers to the wealthy.

  4. July 19, 2015 at 11:32 pm

    Reblogged this on Forwardeconomics.

  5. Calgacus
    July 20, 2015 at 1:25 am

    “People who have money to lend have more money than people who do not have money to lend.” – Galbraith’s First Law of Interest

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