I’ve once heard that the USA owns most of its debt to itself, how is that possible? How can you owe debt to yourself?

Question

I’ve once heard that the USA owns most of its debt to itself, how is that possible? How can you owe debt to yourself?

In: 252

Answer 1

Governments issue bonds. The US will allow you and anyone else to purchase treasury bonds. They yield low interest but unless you think the US is going *fully and completely* belly up, they’re pretty much the most stable and secure investment you could possibly own.

If I purchase a US treasury bond in the amount of $1000, the US is now $1000 in debt to me.

If Canada buys $1,000,000,000 in US treasury bills, then the US is $1B in debt to Canada.

In short, what you heard that the USA is mostly in debt to itself actually means that the USA is mostly in debt to its own *citizens and corporations*.