Fed Is Buying 61 Percent of U.S. Government Debt

``What about Japan and China? Aren't they the major purchasers of U.S. debt? Not any more, notes Goodman. Foreign purchases of U.S. debt dropped to less than 2 percent  of GDP (Gross Domestic Product) from almost 6 percent just three years ago. And private sector investors -- banks, money market and bond mutual funds, individuals and corporations -- have cut their buying way back as well, to less than 1 percent of GDP, down from 6 percent. This serves to hide the fact that the government can't find outside buyers willing to accept rates of return that are below the inflation rate ("negative interest") given the precarious financial condition of the government. It also hides the impact of $1.3 trillion deficits from the public who would likely get much more concerned if real, true market rates of interest were being demanded for purchasing U.S. debt, as such higher rates would increase the deficit even further. Finally it takes pressure off Congress to "do something" because there is no public clamor over the matter, at least for the moment.  ''