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Apple Owns $52.6 Billion In US Treasury Securities, More Than Mexico, Turkey or Norway (cnbc.com)
randomErr shares a report from CNBC: If Apple were a foreign country, CEO Tim Cook might have considerable political clout in the United States. That's because the tech giant owns $52.6 billion in U.S. Treasury securities, which would rank it among the top 25 major foreign holders, according to estimates from the Treasury Department and Apple's SEC filings released Wednesday. Apple's stake in U.S. government securities as of June, up from $41.7 billion as of last September, puts it ahead of Israel, Mexico and the Netherlands, according to Treasury data released last month, which tracks up to May of this year. With $20.1 billion in short-term Treasury securities and $31.35 billion in long-term marketable Treasury securities, Apple still falls far below countries like China and Japan, which hold over a trillion dollars in U.S. government debt each -- which has caused considerable hand-wringing in Washington. Still, Apple is way above other big companies like Amazon, which owns less than $5 billion in U.S. government or agency securities combined, according to regulatory filings.
Treasury bonds are an investment instrument. Everybody with a balanced portfolio of investments will have some of them as well as some diversified stocks, in different proportions relative to your investment strategy. Apple just has a fuckton of money, and of course has it invested so it's not losing value while they're not using it, so a significant fraction of that fuckton of money is going to be in treasury bonds.
That doesn't make the government beholden to Apple or anything. It's not like Apple can say "give me back the money you owe me now, or else". If anything it makes Apple more dependent on the Federal government, and its future ability to pay back its debts.
-Forrest Cameranesi, Geek of all Trades
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It means China and Japan are keeping you economically afloat by funding your deficit spending. On the other hand, it means China and Japan have a strong vested interest in not having the US go bankrupt, or devalue the dollar massively by printing its way out of debt, so China is not likely to economically destroy your economy the way it otherwise could and might.
It's a kind of MAD situation. You better just hope that they do not decide at some point to stop pouring good money after bad, and if you keep going deep into the red because you are not producing enough economic value to sustain your expenditures, the chance of a Greece-like scenario on a vastly bigger scale becomes greater.
No one buys US government debt to collect interest anymore, yields are simply too low (this is the great bubble Greenspan was recently talking about). That hasn't decreased demand as there are still numerous uses, most relating to that it is considered by many as the safest and most liquid asset available. The bet is that the US government can and will honour their debt far better than anyone else both short and long term.
The dollar is the reserve currency
The Dollar is a reserve currency, albeit currently the majority one, accounting for just under two thirds of foreign exchange holdings. There are maybe half a dozen major currencies that are used, the second largest being the Euro, which accounts for about 20% of the total.
and so by definition the US has to run a trade deficit,
With your original statement (premise) being incorrect your inference is similarly wrong. The US could be exporting goods and services to other countries to the same degree it's importing them, but being paid for them in Euros (European Union), or Sterling (UK), or Renminbi (China), or Yen (Japan) and so on. That it's not is the reason there is such a predominance of the Dollar as a reserve currency... Well, that's also untrue, to a degree, as there's a host of historical reasons why the dollar is the dominant currency, but in a simplistic balance of trade equation the statement holds. Your 'argument' puts the cart before the horses however.
Interesting thought: leaders of other countries like to complain about some imagined benefit the US gains from the dollar as reserve currency, one 'benefit' of which is said to be a stronger-than-it-should-be dollar; but anytime any of their currencies appreciate, they immediately move to stem the rise by -- for instance-- selling the local currency and buying US treasuries.
Heh, this much is true, but that has more to do with maintaining exchange rates and thus export pricing, which is a roundabout way of saying engaging in protectionism. Very sensible for a country that wants to maintain its manufacturing industry (for example).
Another interesting thought: reserve currency status requires a floating rate with VERY liquid markets able to absorb any size trade at any time of day or night. Talk of anything supplanting the dollar is way premature, it will be decades before the renminbi or any other currency is ready; and why would anyone want to give up control of their currency for the perceived benefits?
Again, I have to point out the dollar is not the only reserve currency, it's simply the largest. I'd also like to point out that when the dollar became the de-facto standard it wasn't the largest, sterling was. That it became the largest was in part social (Yen and Deutchmarks were not in favour for some strange reason), in part political (governments decided to make the dollar a key part of global reserve currencies) and in part due to the strength of the US economy over that latter part of the 20th century.
Now ask yourself, is global politics the same today? Are the same social bonds (on a national scale) in place? Which economies are the most powerful, and how fast are they growing, relatively?
Your conclusions, especially with regards the timescale, are shaky at best.
The current players seem to prefer being able to maintain strategic weakness against the dollar, while simultaneously jawboning about how awful it is that that lazy Americans run big deficits and exhibit a 'savings shortage'.
Well, DUH! ;-)
The US trade imbalance has nothing to do with cultural factors, lazy workers, or similar nonsense--it is required by the simple algebra of capital and current accounts.
Yes, and no. It has little to do with lazy workers etc. but it is not 'required' as you suggest. More it is a byproduct of multiple state actors operating in a global free market economy (and some 'unwise' decisions by US politicians).