Who are we in “world debt” to?


Who are we in “world debt” to?

In: Economics

Who is the “we” in this situation?

For everyone’s sake, please make sure your question has the right specifics to actually be properly answered.

When countries are in debt, it’s to investors who buy bonds governments issue. Individuals can buy them but more commonly they’re held by institutional investors like retirement and pension funds, insurance companies, university endowments. Sometimes foreign companies or governments will buy them to use their currency they’ve acquired in trade, but typically most is owned domestically.

Assuming you’re referring to the foreign holders of U.S. Debt. A lot of countries own U.S. debts. With China and Japan being the larges debt holders.
Sauce: [U.S. Debt](https://howmuch.net/articles/foreign-holders-of-usa-debt)

I assume you mean, for example, the US national debt.

Imagine that you and your spouse maintain separate bank accounts, yet you share responsibility for paying bills, mortgage, etc. you effectively share finances. At dinner you forget your wallet and “borrow” $100 from your spouse. It’s technically borrowed by you, and technically owed to your spouse. At the end of the day it’s all shared money anyway, so what does it matter? It matters when you write it down and record it.

About 30% of the national debt is owed to itself. This is just like the scenario above – one government agency borrowing from another and the transaction being recorded.

Around 60% of the debt is owed to foreign countries. Likewise, those same foreign countries continue to borrow from the US. Back to that circular shared money analogy.

The remaining 10% is the government borrowing from citizens in the form of various types of bonds. And guess what – if you own one of these bonds and you cash it out, the government may very well borrow from itself in order to pay you – thereby escalating the whole circular thing.

Ok so in reference to us federal debt, the money is owed to any Treasury bond holder. If you own a T bond/bill/note, then the US government owes you money. This is owned mostly in the form of americans 401ks or IRAs, but is also owned by foreign governments and the Federal Reserve.

Now I must note the Federal Reserve is a major owner of the debt (they buy those bonds to introduce money into the economy, this is how the fed controls unemployment and inflation (this is called monetary policy))… please note that all profits generated by the Fed go to the Treasury. (Yes it’s very circular I know)