I cannot get my head around it, what is it? I have heard it is not like debt we go into, who are the government in debt to exactly? And what are the consequences of not paying said debt? Could another country claim our assets or something?
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Government debt is in the form of bonds that are sold to investors. You can buy a bond as an individual, but most are bought by large institutional investors like mutual funds, pension plans, insurance companies, university endowments and such. While some may be foreign owned, the vast majority are owned by Americans/American companies and organizations.
The bonds have specific payback terms with regard to interest payments and time frame to maturity, at which point the government pays back the principal. The government often issues new bonds as old ones mature, when they issue more bonds than mature the debt increases, and if they issue new bonds at a slower pace than they mature the debt goes down.
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