In a recent CNBC news analysis, China analyst Stephen Roach maintains that the US must genuflect to the concerns of China, as the US can no longer domestically afford and fund its own debt because it doesn’t save.
Looks like this supposition is not true.
The chart above graphs the total net worth of households and non-profit organizations in the US. At its heart, this chart illustrates the private sector’s “book value”… currently standing at close to $60 trillion, far larger than US government federal debt.
Even if no foreign buyers for US debt showed up at the window, the situation seems clear that the US has plenty of domestic savings to afford its own debt.
Given that newly issued Treasury bonds came in at historically low interest rates with very high demand just after the debt-limit crisis and S&P’s ludicrous credit rating downgrade, it seems even more clear that given the world’s wealth combined with the US wealth, things look fine, thank you very much.