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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A country is not just a one big blob, not a singular entity.
It has branches that financially totally sepearate, you can’t just willy-nilly move money around.
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Another great example is an enterprise.
Simplified: while there is an owner, the enterprise itself is a separate entity, the owner can’t just take or put in money on a whim, without any valid reason. There are rules about money flow and taxation and the enterprise have responsibilities like payroll. You can get a divident, the enterprise can pay salary to the owner.
Technically the your own enterprise can give you a loan, which you would owe to the enterprise.
The government borrows from the people.
The wealth of America (= what all Americans own put together) is about 400 trillion. The government debt is about 30 trillion. About 20 trillion of that debt is owed to Americans.
The government spends more than it receives (from taxes and fees). To get the extra money, they sell “bonds”, which is a certificate that says you gave the government money, and they promise to pay it back in a certain amount of time, with interest.
The money the government owes people / companies / governments who bought bonds is national debt. When the government gets tax money, a portion of that money goes to whoever bought bonds.
People buy government bonds because the government is good about paying the money back, with interest. The government doesn’t pay a lot of interest, but they’re reliable so it’s a very safe investment.
Americans buy a lot of US bonds.
Basically, the government “prints” money to pay for things, with the intent of “destroying” money when there’s a budget surplus. This almost never happens, which is why inflation is near constant over the decades.
We call this “national debt” for some stupid reason, even though it’s a horribly inaccurate way to describe it.
Since you just print dollars that people accept as real money. You just give yourself an I.O.U and show everyone who much you granted yourself. Infinite loop and bam you owe yourself more than anyone else cause ofc why would you lend someone else more than you lend yourself. Go usa
Imagine you save $500/mo for a family vacation planned for one year from today. After 6 months, your dog pees on your couch and you have to buy a new one. You could dip into your emergency fund, finance through the furniture store, or spend from your vacation account and promise yourself that you will put that money back within 6 months. In the third case, you owe yourself money, because you appropriated funds you will need in the future for another purpose.
The right answer are the States within the United States that make up the federal government. They are the largest holder of US debt. They lend and borrow against the GDP of the United States.
When you hear people invest in stocks and bonds. Those bonds are often US treasuries. Buying a US treasury, is giving the government a loan.
I’ve heard this as well. And that we do not rely on China nearly as much as people would like us to think.
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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