If Every Nation Is in Debt, Who's It Owed To?

I’m not an economist. I’m just an accountant who stares at numbers for a living. But the other day, I was thinking about something that really made me wonder.

If every country is in debt, who’s it all owed to?

We hear it all the time. The United States owes over $38 trillion. Japan owes trillions. Europe owes trillions. Even countries with oil exports and big surpluses are buried in debt. So who’s sitting at the top of the money pile? Who is everyone paying?

I didn’t have a clear answer, so I started digging. And the more I looked into it, the stranger and more unsettling it became. This blog post is an honest look at how the system really works and who it’s actually serving. Because the truth is, it’s not what you think, and it’s not what you’ve been told.

The Global Debt Illusion

Here’s what I found out: every country on Earth is in debt. The U.S. is over $38 trillion. Japan is around $9 trillion. The European Union carries roughly $14 trillion. Even wealthy, resource-rich countries like Saudi Arabia, Germany, and China hold massive debt measured in the hundreds of billions or trillions of dollars.

That’s where the confusion starts. If everyone owes money, who is it owed to? It’s not like there’s some hidden kingdom sitting on a mountain of gold collecting payments from the rest of the world.

The strange part is that most of this debt isn’t owed to some outside power. It’s owed within the system—to other governments, to banks, and often back to ourselves.

When the U.S. government borrows money, it issues Treasury bonds, which are basically IOUs. Those bonds are bought by banks, pension funds, insurance companies, mutual funds, and even the Federal Reserve. And who owns most of those institutions? Americans.

About two-thirds of U.S. debt is owed to institutions and investors inside the United States. The rest is mostly held by foreign governments and banks. Japan holds about $1 trillion. China holds slightly less, around $800 billion. Then you have countries like the U.K., Luxembourg, and Belgium.

But here’s the twist: those countries are in debt too.

So the system turns into a strange debt loop. The U.S. owes Japan. Japan owes someone else. That entity might owe Europe. Europe owes the IMF. Developing countries owe Europe—and then they turn around and buy U.S. bonds as reserves.

It’s a giant financial merry-go-round. Everyone is holding someone else’s IOU, and the system keeps running because everyone agrees to keep playing.

The System Was Built This Way on Purpose

This idea of national debt isn’t new. It goes back hundreds of years.

In 1694, England was at war with France and running out of gold. The king needed money fast, so he made a deal with wealthy merchants: lend me money now, and I’ll pay you back later with interest using future tax revenue.

That agreement became the foundation of modern government borrowing. To manage it, they created the Bank of England. For the first time, governments could spend money they didn’t yet have. Lenders received something powerful in return—a promise backed by the government’s ability to tax its people.

That promise became a bond, and bonds became the backbone of how modern nations raise money. Other countries copied the model: France, the Netherlands, and eventually the United States.

Debt stopped meaning failure. It became a tool. Borrowing signaled strength. The ability to borrow became the ability to rule.

Empires once took wealth by force. Now they borrow it and pay interest on it forever.

One quote really stuck with me:

“Debt is how the ones who design the system create money out of nothing for themselves and make everyone else work to pay it back.”

The Debt Machine We All Live In

Today, debt isn’t just a way for governments to borrow money. It’s the engine that powers the entire financial system.

When the U.S. Treasury needs money; it issues bonds. Banks, mutual funds, and regular investors buy them. Then the Federal Reserve can step in and buy those bonds as well. When it does, it isn’t using money from a vault—it creates new dollars out of thin air in exchange for debt.

That’s how money is created today. Every new dollar is backed by someone else’s debt. There’s no such thing as debt-free money anymore. Every bill, every coin, and every digital dollar began as an IOU on someone’s balance sheet.

Here’s the wild part: governments aren’t expected to pay this debt off. Not now. Not ever.

They roll it over, paying old debt with new debt. If they actually paid it all off, the system would collapse. Banks use government debt as collateral. Pension funds depend on it. Central banks treat it as money itself. That’s why the U.S. Treasuries are called “risk-free assets.”

The goal isn’t to eliminate debt. It’s to keep it growing at a pace the system can survive. This isn’t a flaw. It’s a feature.

Control and Confidence

Power doesn’t always look like power. It doesn’t always look like presidents, parliaments, or flags waving in the air. Today, power often operates quietly behind monetary policy and debt.

National debt has become a way to steer entire countries without firing a single shot. Control the debt and you influence decisions. Control interest rates, and you shape what’s possible and what isn’t.

And the more complex the system becomes, the less likely everyday people are to question it.

When Confidence Breaks

This system works only because people believe in it. Governments don’t have to pay off the debt, but they do have to convince everyone they can.

The moment that belief cracks, everything falls apart.

We’ve seen it happen before—in Greece, Argentina, and Sri Lanka. When confidence collapses, the system breaks. New creditors step in, offering stability in exchange for control. Old debt gets replaced with new loans, and the machine keeps running, but with fewer freedoms and tighter oversight.

What Kind of System Are We Living In?

If every nation is in debt and the money just cycles through the same institutions, maybe the real question isn’t who the debt is owed to. Maybe the real question is what kind of system we’re living in—and who it truly serves.

Debt is no longer something meant to be paid off. It’s something to be managed, extended, and controlled forever. Interest doesn’t flow equally. It flows upward—from workers and taxpayers to banks, funds, and institutions. That’s why global debt and global inequality rise together.

This isn’t about politics. It’s about understanding the rules of a system we never chose to enter.

I write blog posts like this to help people understand how the system really works and how to protect themselves financially—not with fear, but with clarity, truth, and a plan.

If you want to understand the shocking money theory behind America’s debt crisis, check out my YouTube video linked here.

Thanks for reading, and see you there.