eli5: Who does the US owe almost 32 trillion dollars of debt too? If it’s the most powerful nation in the world, can’t it just get rid of it?

Question

eli5: Who does the US owe almost 32 trillion dollars of debt too? If it’s the most powerful nation in the world, can’t it just get rid of it?

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Answer 1

The debt is owned to investors who buy government bonds. Individuals can buy them, but most are owned by institutional investors like mutual funds, pension funds, insurance companies, university endowments. If the government were to default — refuse to pay the interest or principal owed — then investors would no longer buy government bonds and that was severely damage the government’s ability to operate, throwing the entire world into economic catastrophe worse than the Great Recession.