The Chinese lead the way closely followed by the Japanese at over $1 trillion each. Ireland, Brazil and the United Kingdom round out the top five foreign debt holders.

But the majority of the foreign holders are all the other countries that own a smaller piece of the debt.

2. Federal Agencies

The second biggest holder are other branches of the US government. You may feel relieved reading this… after all, it looks like the US government owes a huge portion of its debt to itself and could simply “erase” it if it wanted to…

But it’s important to look closer, because this is the first way of how you own a big portion of the government debt.

The vast majority of this debt is actually held by various government funds such as Social Security and retirement funds.

The US government has made the promise to take care of its citizens. To achieve this goal they put a portion of the collected tax revenue into various funds.

These funds don’t just keep the money in the bank and instead invest a portion of it into various financial instruments to grow it. One of these financial instruments is the national debt in the form of government bonds.

But the important thing to realize here is that this money belongs to the American citizens and not to the government.

And the government has the obligation to pay back that debt in order to allow the Social Security Trust Fund and other funds to fulfill their obligations to the people.

If they don’t pay it back, then it is you, the American citizen, who is on the hook for that debt.

3. Financial Industry

The third biggest holder is the financial industry. These are mutual funds, banks, private pensions, insurance companies, savings bonds and so on.

This is another way of you how are exposed to and own the government debt. Even if you personally don’t own the debt, you certainly have a bank account, a 401(k) or an IRA.

And these financial institutions own government bonds purchased with your money.

4. The Federal Reserve – America’s central bank

The Federal Reserve is the fourth biggest holder. It’s the central bank of the United States and also known as “The Fed”. And although it sounds like a government entity, there is nothing “federal” about the Federal Reserve– it’s a private institution.

This private institution has control over the money supply of the United States. It establishes interest rates and has the power to conjure money out of thin air.

This is extraordinary power. And it has been awarded to an unelected committee of power brokers – many who come from the investment banks.

It works like this:

The Fed literally creates money out of thin air and buys government debt with it. The government uses that money to fund government operations, but in return it has to pay interest to the Fed.

Then the Fed pays out a portion of the earned interest and other profits as dividends to its shareholders… who happen to be other private banks such as JPMorgan.

Much of your income taxes are not used for roads, schools or other public services, but are spent on interest paid to the Fed… on money it created out of nothing.

It’s a perverse system designed to transfer wealth from the American people directly to the banking elite. By continuing its unsustainable spending and debt habits, the US government is stealing from the future – your future and your children’s future.

5. Other holders

Other debt holders include individuals, bank trusts and estates, businesses and other investors… to the tune of over $1.6 trillion.

Included among these “other holders” of US debt is legendary investor and CEO/chairman of Berkshire Hathaway, Warren Buffett. Berkshire has over $100 billion parked in short-term Treasury bills.

6. State & Local Governments

Large financial institutions, hedge funds and other investors are not alone in their holdings of US government debt.

Your state government has money invested in US government debt. And it’s likely that your local government also holds federal debt.

So, with your state and even local government holding a portion of the US national debt, you’re a creditor exposed in multiple ways to a federal government default.