Who Owns the US National Debt? (2023)

Key Takeaways

  • There are two kinds of national debt: intragovernmental and public. Intragovernmental is debt held by the Federal Reserve and Social Security and other government agencies. Public debt is held by the public: individual investors, institutions, foreign governments.
  • After intragovernmental holdings, the next largest category is national debt held by foreign governments. Of those, Japan has the most, followed by China.
  • The Federal Reserve also invests in U.S. national debt as it added liquidity to the economy during and after the Great Recession, and more recently during the pandemic.

The Social Security Trust Fund owns a significant portion of U.S. national debt, but how does that work and what does it mean? Learn more about actually owns the U.S. national debt and how that impacts you.

Two Types of National Debt

TheU.S. national debt reached the debt ceiling of $31.41 trillion in January 2023. The U.S. Treasury manages the U.S. national debt through its Bureau of Public Debt. The bureau classifies that amount into two broad types: intragovernmental holdings and debt held by the public.

Intragovernmental Debt

The Treasury owes this part of the debt to other federal agencies. Intragovernmental holdings totaled more than $6.89 trillion in January 2023. Why would the government owe money to itself? Because some agencies, like the Social Security Trust Fund, take in more revenue from taxes than they need. These agencies then invest in U.S. Treasurys rather than stick this cash under a giant mattress,

This transfers the agencies' excess revenue to the general fund, where it's spent. They redeem their Treasury notes for funds as needed. The federal government then either raises taxes or issues more debt to raise the required cash.

Which agencies own the most Treasury notes, bills, and bonds? Social Security, by a long shot. The U.S. Treasury publishes this information in its monthly Treasury statement.

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Social Security trusts, including the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, held $2.71 trillion in Treasurys as of December 2022. The next largest agency was the Military Retirement Fund at $1.36 trillion. Other large holders of debt include the Office of Personnel Management Retirement, Medicare (which includes the Federal Supplementary Medical Insurance Trust Fund), then cash on hand to fund federal government operations.

Public Debt

The public holds over $24.53 trillion of the national debt, as of January 2023. Foreign governments hold a large portion of the public debt, while the rest is owned by U.S. banks and investors, the Federal Reserve, state and local governments, mutual funds, pensions funds, insurance companies, and holders of savings bonds.

The Treasury breaks down who holds how much of the public debt in a quarterly Treasury bulletin. Foreign and international investors held over $7.4 trillion, according to its December 2022 bulletin, which included data through June 2022. State and local governments held $1.55 trillion and mutual funds had $2.84 trillion.

Other holders of the public debt include insurance companies, U.S. savings bonds, private pension funds, and other holders, including individuals, government-sponsored enterprises, brokers and dealers, banks, bank personal trusts and estates, corporate and non-corporate businesses, and other investors.


The national debt held by the public is not only in Treasury bills, notes, and bonds. It's also in Treasury Inflation-Protected Securities and special state and local government series securities.

If you were to add the debt held by Social Security and all the retirement and pension funds, almost half of the U.S. Treasury debt is held in trust for retirement. Current and future retirees would be hurt the most if the U.S. ever defaulted on its debt.

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Why the Federal Reserve Owns Treasurys

As the nation's central bank, the Federal Reserve is in charge of the country's credit. It doesn't have a financial reason to own Treasury notes. So why does it?

The Federal Reserve actually tripled its holdings between 2007 and 2014. The Fed had to fight the 2008 financial crisis, so it ramped up open market operations by purchasing bank-owned mortgage-backed securities. The Fed began adding U.S. Treasurys in 2009. It owned $1.6 trillion, by 2011, maxing out at $2.5 trillion in 2014.

Thisquantitative easing(QE) stimulated the economy by keeping interest rates low and infusing liquidity into the capital markets. It gave businesses continued access to low-cost borrowing for operations and expansion.

The Fed purchased Treasurys from its member banks, using credit that it created out of thin air. It had the same effect as printing money. By keeping interest rates low, the Fed helped the government avoid the high-interest-rate penalty it would incur for excessive debt.


The Fed ended quantitative easing in October 2014. Interest rates on the benchmark 10-year Treasury note rose from a 200-year low of 1.43% in July 2012 to around 2.17% by the end of 2014 as a result.

The Federal Open Market Committee (FOMC) said the Fed would begin reducing its Treasury holdings in 2017. But it purchased Treasurys again just a few years later.

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On March 15, 2020, the Federal Reserve announced that it would purchase $500 billion in U.S. Treasurys and $200 billion in mortgage-backed securities over the next several months in an effort to stimulate the economy and support financial markets during the pandemic. The FOMC expanded QE purchases to an unlimited amount on March 23, 2020. Its balance sheet peaked at $8.96 trillion in April 2022.

InMarch 2022, the Fed announced it would start reversing these purchases to remove money from the economy and combat inflation. The balance sheet had shrunk to $8.85 trillion by August 2022.

Current Foreign Ownership of U.S. Debt

Japan owned $1.08 trillion in U.S. Treasurys in November 2022, making it the largest foreign holder of the national debt. The second-largest holder is China, which owned $870 billion of U.S. debt. Both Japan and China want to keep the value of the dollar higher than the value of their own currencies. This helps to keep their exports to the U.S. affordable, which helps their economies grow.

China replaced the U.K. as the second-largest foreign holder in 2006 when it increased its holdings to $699 billion.

The U.K. is the third-largest holder with $645.8 billion. Its holdings have increased in rank as Brexit continues to weaken its economy. Luxembourg is next, holding $332.9 billion.

The Bottom Line

The U.S. national debt is the sum of public debt that is held by other countries, the Federal Reserve, mutual funds, and other entities and individuals, as well as intragovernmental holdings held by Social Security, Military Retirement Fund, Medicare, and other retirement funds.

Many people believe that much of the U.S. national debt is owed to foreign countries like China and Japan, but the truth is that most of it is owed to Social Security and pension funds right here in the U.S. This means that U.S. citizens own most of the national debt.

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Frequently Asked Questions (FAQs)

Is the national debt a problem?

Economists and lawmakers frequently debate how much national debt is appropriate. Most agree that some level of debt is necessary to stimulate economic growth and that there is a point at which the debt can become a problem, but they disagree about where that point is. If the debt does get too big, it can result in cuts to government programs, tax hikes, and economic turmoil.

How are the deficit and the national debt related?

The deficit and the national debt are directly related. When the U.S. government spends more than it receives in tax revenues, it has a budget deficit, which must be met by borrowing more money, which further adds to the debt.

Which U.S. president paid off the national debt?

In 1835, Andrew Jackson paid off all of the national interest-bearing debt. He is the only president to have ever done so.


Who is the U.S. national debt owed to? ›

The public includes foreign investors and foreign governments. These two groups account for 30 percent of the debt. Individual investors and banks represent 15 percent of the debt. The Federal Reserve is holding 12 percent of the treasuries issued.

How much of U.S. debt is owned by China? ›

US Treasurys Owned by China, in USD Billions

As of Jan. 2021, China owns $1.095 trillion of the total $28 trillion U.S. national debt.

Why can't the US pay off the national debt? ›

Unless there is an increase in economic activity commensurate with the amount of money that is created, printing money to pay off the debt would make inflation worse. This would be, as the saying goes, "too much money chasing too few goods."

Can the US pay off its debt? ›

Can the U.S. Pay Off its Debt? As budget deficits are one of the factors that contribute to the national debt, the U.S. can take measures to pay off its debt through budget surpluses. The last time that the U.S. held a budget surplus was in 2001.

Why does the US owe so much money? ›

Tax cuts, stimulus programs, increased government spending, and decreased tax revenue caused by widespread unemployment generally account for sharp rises in the national debt.

Who owns the largest share of the national debt? ›

As of November 2022, federal debt held by the public was $31 trillion. Debt held by the public was estimated at 96.19% of GDP, and approximately 33% of this public debt was owned by foreigners. The United States has the largest external debt in the world.

Why do foreign countries buy U.S. debt? ›

First, sovereign debt frequently comprises part of other countries' foreign exchange reserves. Second, central banks buy sovereign debt as part of monetary policy to maintain the exchange rate or forestall economic instability.

Why is China selling U.S. debt? ›

China buys Treasuries to help depress the value of its currency, the yuan. A cheaper yuan makes the country's exports less expensive for foreign buyers. The Chinese economy would suffer as much as, if not more than, that of the United States if China were to suddenly stop buying U.S. debt.

What happens if China calls in U.S. debt? ›

What Would Happen if China Were to Call In Its Debt? China's position as the largest foreign holder of U.S. debt gives it some political leverage. It is responsible for lower interest rates and cheap consumer goods. If it were to call in its debt, U.S. interest rates and prices could rise, slowing U.S. economic growth.

Does United States owe China any money? ›

That means we owe China nearly a trillion dollars! But wait, let us explain. While this number may seem large, the total amount of U.S Treasuries outstanding is more than 30 trillion dollars. And, China isn't even the largest foreign holder of American debt.

What happens if the US stops paying its debt? ›

If the debt ceiling binds, and the U.S. Treasury does not have the ability to pay its obligations, the negative economic effects would quickly mount and risk triggering a deep recession. The economic effects of such an unprecedented event would surely be negative.

What happens if US fails to pay debt? ›

A U.S. debt default is much more than the federal government simply not paying its debt. It would greatly impact the economy and people in the U.S: A default would increase interest rates, which would then increase prices and contribute to inflation.

What happens if US debt gets too high? ›

Key Takeaways

The national debt also impacts the economy because if it gets too high, consumer and business confidence in the economy may dwindle, which could lead to turmoil in the financial markets and higher interest rates.

How to get america out of debt? ›

Raising taxes and cutting spending are two of the most popular solutions for reducing debt, but politicians may be hesitant to do both. Diverting spending from the military to other sectors may boost job growth, which could spur consumer spending and help the economy.

What country is in the most debt? ›

Japan, with its population of 127,185,332, has the highest national debt in the world at 234.18% of its GDP, followed by Greece at 181.78%.

How much is America worth? ›

United States - Federal Government; Net Worth (IMA), Level was -20997153.00000 Mil. of $ in July of 2022, according to the United States Federal Reserve.

How much debt can the U.S. handle? ›

What is the debt limit? The debt limit is a ceiling imposed by Congress on the amount of debt that the U.S. Federal government can have outstanding. This limit has been set at $28.4 trillion since August 1st, 2021.

Where does U.S. borrow money from? ›

So, how does the US borrow money? Treasury bonds are how the US - and all governments for that matter - borrow hard cash: they issue government securities, which other countries and institutions buy.

Does Canada have debt to China? ›

The little-known debt comes from loans to Beijing through the Canada Account, a federal fund providing credit for export-related transactions, usually to foreign governments and corporations to secure the purchase of Canadian goods, such as commercial planes.

Is China in a debt crisis? ›

Excessive debt is one of the greatest challenges facing the Chinese economy. In September 2021, non-financial liabilities stood at 264.8 percent of GDP (Caixin, November 3, 2021).

Which country is most indebted to China? ›

Sri Lanka, Pakistan and Maldives in South Asia stand neck-deep in debt to China.

Can you go to jail in the U.S. for debt? ›

You can't be arrested for debt just because you're behind on payments. No creditor of consumer debt — including credit cards, medical debt, a payday loan, mortgage or student loans — can force you to be arrested, jailed or put in any kind of court-ordered community service.

Does U.S. debt follow you to another country? ›

Technically, nothing happens to your debt when you leave the country. It's still your debt, and your creditors and collectors will continue trying to get you to pay it back. Just as they would before, those efforts may include phone calls and letters.

Does China depend on the US dollar? ›

It is the world's third-largest creditor, and it is a major lender to developing economies. China also happens to be America's second largest international creditor. And yet China remains highly dependent on the dollar and access to America's financial system in terms of international trade and finance.

Can China take over US economy? ›

"China will be unable to surpass the U.S. economically, even after 2036," JCER said, due to slower productivity gains coupled with labor shortages. The Communist Party of China has set two long-term targets for 2035 and the middle of this century in amendments to the constitution made in October.

When was the last time the US hit the debt limit? ›

On January 19, 2023, the United States again reached the debt ceiling.

How many times has the US hit the debt limit? ›

Congress has always acted when called upon to raise the debt limit. Since 1960, Congress has acted 78 separate times to permanently raise, temporarily extend, or revise the definition of the debt limit – 49 times under Republican presidents and 29 times under Democratic presidents.

Does debt go away after 7 years in USA? ›

In most states, the debt itself does not expire or disappear until you pay it. Under the Fair Credit Reporting Act, debts can appear on your credit report generally for seven years and in a few cases, longer than that.

Has the U.S. ever not paid its debt? ›

The credit of the United States is built on centuries of stability and responsibility. This country has never intentionally defaulted on its obligations because of the debt limit.

Can a debt ever be written off? ›

If you apply for an administration order, you may be able to have some of your debt written off. This is called a composition order. You can ask the judge for a composition order or the judge may decide to give you one after looking at your financial circumstances.

Does debt ever get forgiven? ›

Not all debts qualify for forgiveness, but forgiveness programs can offer some much-needed assistance if they do. You'll want to carefully consider all of your debt management options to make sure debt forgiveness is the right option for your financial situation.

How much debt is considered a lot? ›

Debt-to-income ratio is your monthly debt obligations compared to your gross monthly income (before taxes), expressed as a percentage. A good debt-to-income ratio is less than or equal to 36%. Any debt-to-income ratio above 43% is considered to be too much debt.

How much American debt does Russia own? ›

The value of U.S. Treasury securities held by residents of Russia amounted to nearly 2.1 billion U.S. dollars in November 2022, having increased from the previous month.

What happens if US defaults on debt? ›

Experts and officials have warned a default, which could come after the U.S. government hit its $31.4 trillion debt limit last week, could disrupt an array of government services, including delayed or missing Social Security payments to retirees. The payments are a lifeline for many seniors.

Where does us borrow money from? ›

So, how does the US borrow money? Treasury bonds are how the US - and all governments for that matter - borrow hard cash: they issue government securities, which other countries and institutions buy.

What's the national debt of Canada? ›

The total financial liabilities or gross debt of the Canadian consolidated provincial, territorial and local governments (PTLG) was $1,460 billion in 2021 (the fiscal year ending 31 March 2022), as shown in the table below.


1. Why the US is always hitting a "debt ceiling"
2. Does U.S. debt matter? | CNBC Explains
(CNBC International)
3. ‘I will not let that happen’ says Biden on national debt default
(Guardian News)
4. US debt now more than $31 trillion
5. Can the U.S. Keep Adding Debt Forever? | WSJ
(Wall Street Journal)
6. Who owns the UK national Debt? Is it good for us and the future?
(Richard J Murphy)
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