What exactly is the national debt, and to whom is the debt owed?
Simply put, the national debt is the money Congress owes to whomever Congress has borrowed from. The national debt, more properly called the public or federal debt, is an accumulation of yearly Congressional budget deficits. Constitutionally, Congress has authority to borrow. In concept, Congress borrows much the same way you or I borrow when we sign an IOU for money received and then receive money. For example, Congress uses savings bonds and treasury bills to serve as the IOU. Congress also borrows through the Federal Open Market Committee. Actually, Congress only increases its self-imposed debt limit; the U.S. Treasury does all the work at auction through issuing and selling commercial instruments: bonds, bills and notes. The problem with the public debt is that through the machinations of the Federal Reserve and Treasury, Congress does not always borrow currency in circulation, but creates currency out of thin air. When that debt is purchased by individuals, currency already in cir
