The Largest Single Holder of US Debt Is Now..

The Federal Reserve Is Now The Single Largest Holder of US Debt

Who is the largest single holder of US Treasury securities?

Is it China? Is it Japan?

No and no.

According to Zerohedge.com, the largest single holder of US Treasury securities is now the Federal Reserve.

That's right - the Federal Reserve now owns approximately $891 billion in US Treasury securities, eclipsing the $884 billion or so that is being held by China. Japan is currently in third place with approximately $864 billion.

The Federal Reserve has surged into the top spot thanks to "QE2" (another round of quantitative easing). This additional round of quantitative easing is being undertaken in order to kick-start the economy and (hopefully) lower the national unemployment rate, which is currently sitting at just under 10%.

The Fed has chosen the dangerous path of an additional round of quantitative easing because it believes that the possibility of high inflation would be less damaging to the economy than a very sharp drop in aggregate demand, which would result in a deflationary spiral. The Fed has gone the "lesser of two evils" route (in their minds anyways) by choosing the inflationist route via quantitative easing.

Will the Fed's policy end up proving successful?

Will we end up in a hyperinflationary environment, as many are now fearing?