Here’s a chart of the economy’s flow of funds, from Option ARMageddon: (This chart was also stolen here and here)
Mortgage payments are still responsible for a substantial portion of the US Debt, but Government borrowing has grown YoY(and will grow more in 2010). This is the phenomenon of crowding out, whereby government spending increases interest rates for the private sector, resulting in a decrease in borrowing (in today’s case, the treasury is competing with the private sector for buyers). Meanwhile, the FED’s statistics likely understate the Treasury’s liabilities:
The Fed only includes publicly held debt when calculating total federal government borrowings, $6.7 trillion at the end of Q1. This excludes over $4 trillion owed to the Social Security “trust fund.” More importantly, it excludes $60 trillion of unfunded future liabilities for Medicare and Social Security.
