Thank you notes are in order, addressed to all the countries buying US Treasury debt

Of course, the increase was generated by federal programs designed to stimulate the virus-beleaguered economy, assist struggling businesses, and provide relief for the tens of millions who are out of work and hurting. By all indications, we can expect to see even more deficit spending as the economy continues to stumble forward.

But wait a minute. All this deficit spending business, even when we find it necessary, can sound a little too easy. Congress appropriates another trillion-dollar relief bill, the president signs it into law, and the Treasury provides the bucks. But from where? Who’s supplying the money?

Well, the Treasury sells bonds and bills to U.S. corporations, state and local government entities, American citizens, and foreign citizens and governments, which it will pay back with interest. Right now, U.S. investors are putting lots of their cash into Treasury bills. There aren’t many other places to put excess cash right about now.

As you’ve probably heard, a lot of our debt is held by foreigners. At the end of April, nearly $6.8 trillion was held in foreign accounts which, in spite of the pandemic, is above the $6.4 trillion held in April 2019. Our foreign friends have not pulled back on buying U.S. debt even though they are fighting the virus, too. This is all voluntary, and leaders believe it’s in our best interest, so it looks as though the world has our backs.

So, if we were to be so polite as to send thank you notes to those foreigners who are assisting us, which country would stand at the top of the list? That would be Japan. In April 2020, the Japanese held $1.26 trillion in U.S. debt, up from $1.06 trillion a year ago. They are really helping by taking on $260 billion more debt just when we needed it.

Second? China. Not quite as helpful as Japan, the Chinese held $1.01 trillion in U.S. government debt at the end of April, down from $1.11 trillion. More on this shortly.

Thank you notes could also be sent to the generous lenders in the United Kingdom, which upped the ante by more than $60 billion; Ireland, which increased its load by $31 billion; Luxemburg with an additional $42 billion; and Hong Kong with another $42 billion.

It all begs the big question: Where do foreigners get the U.S. dollars to invest in our bonds? The answer might be called the circle of life. They get the dollars primarily from Americans purchasing their goods and services. We buy their stuff with our currency, and they lend the dollars to us so that we can fund our deficit.

This also helps to explain why China has reduced its investment in U.S. bonds and bills. We’ve imposed lots of tariffs on Chinese goods, and that has cut off the flow of dollars to Chinese investors who might otherwise help fund our deficit.

One would think that our national leaders might look at this circle of life and exclaim: “It’s a wonderful world.” But most of the time, they don’t say that. Instead, we mostly hear grumbles and complaints about all the goods and services we buy from abroad, how foreigners take advantage of us, and how we should find ways to produce all that stuff ourselves — all while, in good times and bad, they continue to run deficits and borrow from abroad.

Americans live in a world where our deficit habit is partly funded by people in other countries who help us live beyond our means. That will remain unless, of course, we just print more money and watch the dollar’s value disappear.

As we remain on the former course, maybe we should start sending some thank you notes.

Bruce Yandle is a contributor to the Washington Examiner’s Beltway Confidential blog. He is a distinguished adjunct fellow with the Mercatus Center at George Mason University and dean emeritus of the Clemson University College of Business & Behavioral Science. He developed the “Bootleggers and Baptists” political model.