The U.S. federal government's debt has surpassed $40 trillion (about 5,550.5 trillion won) for the first time. Even if humanity sold all the gold ever mined, it would still fall short by $7 trillion (about 9,702 trillion won). Yet Central Banks, banks, and pension funds around the world keep buying U.S. Government Bonds.
The U.S. Treasury said on the 19th (local time) that the federal government's total debt stood at $40.047 trillion (about 5,550.5 trillion won). This is the first time the national debt has crossed the $40 trillion mark. The fiscal watchdog Peter G. Peterson Foundation tallied that this debt is still growing by about $7 billion (about 9.7 trillion won) per day on average. As of the 20th, the national debt was up $2.85 trillion (about 3,950 trillion won), or 7.7%, from a year earlier.
According to the Committee for a Responsible Federal Budget (CRFB), it took about 200 years for U.S. national debt to top $1 trillion for the first time in 1981. Even in January 2017, when President Donald Trump began his first term, it was $19.95 trillion. The Congressional Budget Office (CBO) as recently as May 2023 expected the $40 trillion threshold to be reached in 2028. But it doubled in less than 10 years. After surpassing $39 trillion in March this year, it took less than five months for another $1 trillion to pile up.
Dividing the national debt by the U.S. population of 343 million means each person owes $117,000 (about 162 million won). Even if the United States repaid $1 billion a day, it would take 110 years just to cover the principal. Even if you combine the wealth produced in one year by the five largest economies excluding the United States (China, Germany, Japan, the United Kingdom, and India), it totals $37 trillion, $3 trillion short of U.S. national debt.
On the 20th, the U.S. Treasury tallied that $32.266 trillion (about 4,472.1 trillion won) of the $40 trillion has been raised by selling Government Bonds in the market. The money held by investors and financial firms is called debt held by the public. The remaining roughly $8 trillion (about 1,108.8 trillion won) is Government Bonds purchased with surplus funds in U.S. government accounts, such as the Social Security Trust Fund.
Within the United States, the largest holders of U.S. Government Bonds are mutual funds, with holdings reaching $5.195 trillion (about 7,200 trillion won). The Federal Reserve, which oversees monetary policy, also buys and sells Government Bonds to manage market interest rates and the money supply. According to the tally, U.S. Government Bonds held by the Federal Reserve (Fed) amounted to $4.528 trillion (about 6,276 trillion won), right behind funds. Next came depository institutions such as commercial banks with $2.083 trillion, state and local governments with $1.636 trillion, and pension funds with $1.135 trillion.
More than three-quarters of U.S. national debt is absorbed within the United States. U.S. Government Bonds held by foreign investors totaled $9.29 trillion (about 1,287.6 trillion won), only about 23% of the total. Although the foreign share, which was just 5% in 1970, has steadily increased for more than half a century, it still falls short of a quarter of the total.
Among overseas creditors, the country holding the most U.S. Government Bonds is Japan, not China. Japan's holdings of U.S. Government Bonds amount to $1.1167 trillion (about 1,548 trillion won). The United Kingdom follows with $939.9 billion (about 1,303 trillion won), and China with $633.4 billion (about 878 trillion won). Korea's holdings of U.S. Government Bonds are $134.7 billion (about 187 trillion won).
However, country-by-country holdings of U.S. Government Bonds are tallied based on where the financial institution that holds them in custody is located. The Wall Street Journal (WSJ) noted that because many third-country investors entrust Government Bonds to financial institutions in the United Kingdom, Luxembourg, and the Cayman Islands, the holdings of financial hub countries often appear large.
Central Banks in each country accumulate foreign exchange reserves in dollars to defend exchange rates, respond to financial crises, and prepare for payments for imports. According to the International Monetary Fund (IMF), in the first quarter of this year the dollar accounted for 57.13% of global Central Bank foreign reserves. The dollar's share far exceeded the euro (20.03%) and the yuan (1.99%). No country can keep foreign reserves amounting to hundreds of billions of dollars in bundles of cash in a vault. U.S. Government Bonds in such cases can be converted to cash immediately, are relatively safer than other assets, and also pay interest. Major holders of U.S. Government Bonds likewise buy them not out of political or economic calculations to help the United States, but as part of managing the dollars they hold.
Beyond national authorities, financial institutions such as banks and securities firms also use U.S. Government Bonds as collateral when they need to borrow money urgently. The U.S. Treasury tallies that about $1 trillion (about 1,386 trillion won) is traded daily in the cash Treasury market. It is the world's largest and most active bond market, so even selling tens of billions of dollars does not move prices much.
The Bank for International Settlements (BIS) analyzed that the international currency status strengthens over time through a "network effect," whereby the more it is used in trade and finance, the more it is used. In the eurozone, Germany, France, and Italy issue Government Bonds separately, fragmenting the market and keeping trading volumes small. China is the world's second-largest economy, but the yuan is constrained in capital mobility. As more participants use U.S. Government Bonds, the market grows and transactions become easier, creating a virtuous cycle.
Unlike developing countries such as Argentina or Turkey, the United States borrows in dollars it issues itself, not in other people's money. This means it does not face an emerging-market-style crisis in which foreign-currency debt swells as the exchange rate jumps. The CBO explained that the kind of fiscal crises seen in Argentina or Greece are highly unlikely to occur in the United States.
However, if it tries to print unlimited dollars to resolve the debt, inflation could surge and trust in the dollar could be shaken. The U.S. Treasury explains that Government Bond yields serve as the risk-free rate in global financial markets. When other countries' governments and corporations borrow, this rate is the yardstick. If U.S. government borrowing costs rise, pressure is transmitted to the cost of borrowing for corporations and households in each country, as well as to stock and real estate prices. Maya MacGuineas, president of the Committee for a Responsible Federal Budget (CRFB), told CNN on the 23rd, "Borrowing on this scale leaves a big imprint on the entire economy," warning, "If Congress doesn't act, we could fall into a dangerous debt doom loop."
The money the U.S. government spends on Government Bond interest is about $1.1 trillion (about 1,525 trillion won) a year, surpassing defense outlays. According to the WSJ, interest payments in the first 10 months of fiscal 2026 were $963 billion. That was $200 billion more than defense over the same period and also exceeded Medicare outlays. Al Jazeera projected that 19% of the taxes the United States collects this year will go solely to paying Government Bond interest.
As interest payments grow, the fiscal deficit widens, and the government issues more Government Bonds to fill that gap, creating a vicious cycle. Jessica Riddle, a budget and tax research fellow at the Brookings Institution, told Al Jazeera that "this debt is slowing U.S. growth, pushing up interest rates, and worsening inflation." She projected that the share of interest relative to tax revenue will rise to 50% in 30 years.