You will be stunned by who owes the most US Debt!

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Turns out the National Debt is a complex interplay of economic policy, investment safety, and global finance dynamics. In other words: a shell game. Turns out our biggest debtor is us.

The total U.S. debt figure of around $34.4 trillion is correct as per recent reports.

Breakdown of Debt Holders:

  1. Intragovernmental Debt ($7T):
    • This refers to debt that one part of the government owes to another. For instance, Social Security Trust Funds invest in special-issue Treasury securities, meaning the government owes this money to itself. This isn’t debt that needs to be paid back in the traditional sense, as it’s essentially moving money around within government accounts for accounting purposes.
  2. Savings Bonds ($5.7T):
    • This includes Series EE and I bonds, which are popular with individual Americans. These bonds are backed by the full faith and credit of the U.S. government, making them a very secure investment.
  3. Federal Reserve ($5.2T):
    • The Federal Reserve holds Treasury securities as part of its monetary policy operations. This is done to influence interest rates and manage the money supply. When the Fed buys these securities, it essentially creates money, which can be used to inject liquidity into the economy.
  4. Mutual Funds and Banks:
    • These financial institutions hold significant amounts of U.S. debt because Treasuries are considered safe investments. They are often used as collateral in financial transactions or as a way to park excess cash.
  5. Foreign Holdings:
    • China ($820B) and Japan ($1.1T): These countries are among the largest foreign holders of U.S. debt. Holding U.S. debt is seen as a way to invest reserves in a safe asset.
    • Other Countries ($5.3T): This includes countries like the UK, Brazil, and Ireland, among others. Countries hold U.S. debt for various reasons, including to support their currencies or as part of their foreign exchange reserves.

What It Means:

  • Economic Power: The U.S. dollar’s status as the world’s primary reserve currency means there’s always demand for U.S. debt, which helps finance government spending.
  • Interest Payments: The U.S. has to pay interest on this debt, which can become a significant portion of the federal budget. However, because a large part of the debt is internal, the interest payments mostly circulate back into the U.S. economy.
  • Monetary Policy Tool: The Fed’s holdings of debt are part of its toolkit for managing inflation and economic growth.
  • Security for Investors: U.S. Treasury securities are seen as one of the safest investments globally, which is why both domestic and foreign entities hold so much.
  • Political and Economic Leverage: Countries holding U.S. debt might use it as leverage in international negotiations or as assurance of economic stability.

Congressman Tom Massie designed this debt badge to wear in Congress. It uses Wi-Fi to get the debt to the penny from Treasury once per day.