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

The Government != The people

So here’s how it typically works. The government wants to remove money from circulation, they do this by selling bonds. You pay them $100 for $1000 in a year.

That bond is purchased by a US citizen, so now the US government is $1000 in debt to the US.