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?
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Consider the situation where you have two bank accounts, one for a vacation and one for normal spending. Now, you decide you want to buy a new TV for $1000, and take that money out of the vacation fund as you don’t have enough in your spending account. To keep your accounting accurate, you should put a $1000 IOU into the vacation account. This means your spending account now owes your vacation account $1000, or you owe yourself $1000.
The US government [does this a lot](https://en.wikipedia.org/wiki/National_debt_of_the_United_States#/media/File:Holders_of_the_National_Debt_of_the_United_States.gif) – about $4.5 trillion compared to about $6.5 trillion held by the public (as of Dec 2008). For example, Social Security turned a net profit for many years and currently has a trust fund of about $2.8 trillion. Its not normally a good idea to keep that kind of money sitting as cash in a vault, so the trust fund invested it in US treasury notes, basically loaning it to the US general fund. As such, the US general fund owes the Social Security trust close to $2.8 trillion. Typically, these isolated funds are set by law, such as is the case with Social Security – some other big ones are the federal employees retirement trust, the federal hospital insurance trust, and the federal unemployment trust.
Additionally, much of the [US national debt](https://en.wikipedia.org/wiki/National_debt_of_the_United_States#/media/File:Estimated_ownership_of_treasury_securities_by_year.gif) is held by US nationals. Of the $6.5 trillion held by the public, about $3.5 trillion is held by US nationals or US corporations (as of Sept 2008).
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