When the u.s. issues treasury bills (debt), what do the proceeds actually pay for? ?

Question

when people say foreign countries own our debt, why was that money issued, by whom, and what does it pay for specifically? if this is for the federal reserve to issue/print more money, then why do they do so? (and what does this pay for?)

Answer 1

It is not earmarked for anything specific. The cash is just added to the available funds and is intended to address the short fall between revenue collected and government expenses.

Who owns the debt? Here is a rough breakdown.

50% - U.S. government agencies with the biggest owner being the Social Security trust fund.

25% - Foreign investors with Chinese and Japanese financial institutions being the biggest holder.

Why Japan and China? Because the trade deficit pumps a lot of excess dollars their way which they use to buy U.S. Debt.

There is no direct relationship betweeen the amount of U.S. Debt and the issuing of new money.