Who Holds The American National Debt ?

With the debate over the debt ceiling that has been going on lately, it brings up a very good question -- just who is it that has lent all that money to our government? Who is going to be hurt if the United States doesn't raise the debt ceiling and has to default on paying back those loans?

One answer is clear -- all Americans are going to be hurt because the debt rating of the country will be lowered, and this will make it much harder for the nation to borrow (no matter how critical that need to borrow is). It will be harder to get the money and it will cost a lot more to pay it back.

Most Americans seem to think that most of our debt is owned by foreigners -- especially the Chinese and Japanese. This idea has become so pervasive in our society that people even jokes about the country being repossessed by our Asian "overlords". The problem is that this is not even remotely true.

China only owns about 8% of the American debt, and Japan owns about another 6.4%. In fact the total part of the American debt owned by foreigners (including the United Kingdom, Hong Kong, Brazil Taiwan, Caribbean bankers, and the oil-exporting countries) is about 31.47% (or $4.5 trillion). This is enough to cause some worldwide economic problems if we default on that debt, but it is nowhere near the majority of the debt owed by America.

The truth is that the huge majority of the debt-holders are the American people themselves (both by individuals and by government entities). The people that would be hurt the most by a government default on the debt are the Americans themselves, because that is who holds most of the debt -- about 68.53% (or $9.8 trillion).

According to Business Insider, here are the holders of United States government debt:

• Hong Kong: $121.9 billion (0.9 percent)
• Caribbean banking centers: $148.3 (1 percent)
• Taiwan: $153.4 billion (1.1 percent)
• Brazil: $211.4 billion (1.5 percent)
• Oil exporting countries: $229.8 billion (1.6 percent)
• Mutual funds: $300.5 billion (2 percent)
• Commercial banks: $301.8 billion (2.1 percent)
• State, local and federal retirement funds: $320.9 billion (2.2 percent)
• Money market mutual funds: $337.7 billion (2.4 percent)
• United Kingdom: $346.5 billion (2.4 percent)
• Private pension funds: $504.7 billion (3.5 percent)
• State and local governments: $506.1 billion (3.5 percent)
• Japan: $912.4 billion (6.4 percent)
• U.S. households: $959.4 billion (6.6 percent)
• China: $1.16 trillion (8 percent)
• The U.S. Treasury: $1.63 trillion (11.3 percent)
• Social Security trust fund: $2.67 trillion (19 percent)