US National Debt Hits $36 Trillion: Understanding the Implications

The United States has reached a staggering national debt of $36.2 trillion, with three-quarters of this amount held domestically and the remaining quarter owned by foreign investors. This substantial debt represents 122 percent of the country’s annual economic output or gross domestic product (GDP) and is growing by approximately $1 trillion every three months.

What is US Debt?

US debt refers to the total amount of money the government owes to its lenders. This debt is financed through various debt securities, including Treasury bills, notes, and bonds, which are essentially loans made by investors to the US government with a promise to repay them with interest.

Who Holds US Debt?

The breakdown of US debt holders is as follows:

• Domestic Holders: $27.2 trillion (three-quarters of the total debt)
  • US Private Investors and Entities: $15.16 trillion (42% of the total debt)
  • Intra-Governmental US Agencies and Trusts: $7.36 trillion (20% of the total debt)
  • Federal Reserve: $4.63 trillion (13% of the total debt)
• Foreign Investors: $9.05 trillion (25% of the total debt)
  • Japan: $1.13 trillion
  • United Kingdom: $779.3 billion
  • China: $765.4 billion
  • Cayman Islands: $455.3 billion
  • Canada: $426.2 billion

Implications of High US Debt

The growing national debt has significant implications for the average American. If the US government spends more on debt interest repayments, it can impact budgets and public spending. To generate revenue to pay down the national debt, the government might raise taxes, increasing costs for average people. Furthermore, increasing debt could lead to higher interest rates, making mortgages, car loans, and credit card debt more expensive.

In light of Trump’s tariffs, countries like Japan and China have indicated they will use their substantial holdings of US treasuries as leverage in trade negotiations. Japanese Finance Minister Katsunobu Kato stated that Japan’s massive holding of US treasuries could be a “card on the table” in trade negotiations.