This keeps coming up in political debates. Some people say it’s a huge problem, others act like it doesn’t matter. Who do we even owe all this money to? Is it just us owing ourselves? And how did it get this bad?
Edit: I was thinking… what if we stopped borrowing for a few years and used half the national budget to pay it down? Would that work?
We spent $620 billion just on interest in 2023…
For comparison, the military budget that year was $825 billion.
Shannon said:
We spent $620 billion just on interest in 2023…
For comparison, the military budget that year was $825 billion.
So who exactly are we paying all this interest to?
Shannon said:
We spent $620 billion just on interest in 2023…
For comparison, the military budget that year was $825 billion.
So who exactly are we paying all this interest to?
Mostly U.S. investors, China, Japan, the Fed, and a few other countries.
Source: link
@Jaden
> About 70% of the debt is owned by U.S. institutions, the government itself, and the Federal Reserve. Just under 30% is held by foreign countries.
Cort said:
@Jaden
> About 70% of the debt is owned by U.S. institutions, the government itself, and the Federal Reserve. Just under 30% is held by foreign countries.
Appreciate the quick summary!
@Jaden
No problem, just copied it from the article since I figured most people wouldn’t click the link. 
Cort said:
@Jaden
> About 70% of the debt is owned by U.S. institutions, the government itself, and the Federal Reserve. Just under 30% is held by foreign countries.
A big chunk of that ‘institutional investment’ is just regular people’s retirement accounts—401(k)s, IRAs, pension funds, etc.
Trump actually suggested defaulting on some of this debt, which would be… a disaster.
@Marlo
Imagine the chaos if that actually happened.
@Jaden
Fun fact: The biggest single creditor to the U.S. Treasury is… the Social Security trust fund. If the government can’t keep rolling over its debt, Social Security could be in serious trouble.
Shannon said:
We spent $620 billion just on interest in 2023…
For comparison, the military budget that year was $825 billion.
So who exactly are we paying all this interest to?
It’s actually the other way around. Investors aren’t being ‘subsidized’—they’re loaning the government money and taking on the risk that it won’t be paid back. Interest payments are just the cost of borrowing.
@North
Fair, but all that interest money is still flowing back into the economy. It’s basically future generations paying today’s investors. Feels like we’re kicking the can down the road forever.
Shannon said:
We spent $620 billion just on interest in 2023…
For comparison, the military budget that year was $825 billion.
This is mostly because interest rates went up.
Ironically, inflation actually helps shrink the real value of debt. Not the best plan, but better than nothing at this point.
@Kasey
Wouldn’t it be better to just grow the economy so the debt is smaller in comparison?
Noble said:
@Kasey
Wouldn’t it be better to just grow the economy so the debt is smaller in comparison?
Sure, but that would require higher taxes while keeping spending under control. Realistically, that’s not going to happen anytime soon.
@Kasey
Inflation sounds like an easy fix, but it just makes lenders charge higher interest rates to keep up. That creates a cycle where borrowing keeps getting more expensive.
Lennox said:
@Kasey
Inflation sounds like an easy fix, but it just makes lenders charge higher interest rates to keep up. That creates a cycle where borrowing keeps getting more expensive.
Fair point. But if inflation stays around 3% and we keep deficits lower than that, the debt shrinks in real terms without needing drastic spending cuts or tax hikes.
Debt itself isn’t the problem. The issue is how much we’re paying in interest.
Brady said:
Debt itself isn’t the problem. The issue is how much we’re paying in interest.
Yep. The real question is whether we ever slow down the borrowing or just keep piling it on forever.
Brady said:
Debt itself isn’t the problem. The issue is how much we’re paying in interest.
What kind of interest are we talking about?