The United States is in a lot of debt. Currently the country owes $27.2 trillion. But who would even lend them that much money? Who does the US owe this massive sum?
Well, the answer to that is pretty simple. In large part, it owes itself that money, but there's also quite a few other countries it owes to. the US essentially owes two groups of people, the general public, which can be other countries or even investors in the US and itself. But before we get into who makes up those groups and what the percentages look like, first let's get some basics. Whenever the US government needs money, it raises that money through the issuing of savings bonds or treasury bonds. These bonds are basically pieces of paper that say the US will pay the person or agency that buys it back with a little bit of interest. Many people want to buy bonds because they're pretty solid investments, like banks, foreign governments, and maybe even you. The debt ceiling, which you may have heard about, is actually the CAP that is set on what the US Treasury can issue in terms of bonds. Congress will raise the debt ceiling to finance government spending through the sale of more of these treasuries with those basics out of the way of how the government is funded. Who actually owns all of these bonds? No, it's not really one of our enemies or some secret super powerful group. Foreign governments and investors only own about 30% of overall U.S. debt, whereas the remaining 70% is either held by US investors, the Federal Reserve, or even the US government itself. US investors, like banks, institutions, and regular people, own about 33% of the total debt. The Federal Reserve or the US's privatized Central Bank owns about 12% of the total debt.
The US government itself actually owns roughly 27% of total debt. That may not make a lot of sense, but this is essentially agencies like Social Security, Medicare, and disability insurance buying up debt from the US Treasury and using interest payments on that debt to fund their own programs. Normally you couldn't loan yourself some money, but in the case of governments that print the currency, they actually can. The remaining roughly 28 to 30% of debt is owned by foreign investors, the largest being China and Japan. But Brazil, Ireland and the UK are other big purchasers. Investing in U.S. Treasuries allow these countries to control their currency value in relation to the U.S. dollar, which can be beneficial for trade and other monetary policy. So who does the US owe money to? Well, largely its own people, companies send even itself. But 1/3 of overall debt is owed to other countries. Do you think we'll ever pay it off? Leave a comment below.
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