The US is now buried in $40T of debt — but who’s buying the IOUs right now? Here’s the unsettling answer for Americans

Jing Pan

Mon, August 31, 2026 at 7:30 PM GMT+3 9 min read

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The U.S. just crossed a number so large it barely registers anymore: $40 trillion in debt.

To put that in perspective, it took the country over 200 years to hit its first trillion in debt. Now Washington adds that much roughly every 100 days.

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To fund it, the Treasury doesn't send out a single invoice. It sells the debt off in pieces — a bill here, a note there, a 30-year bond, auctioned off in a room most Americans have never heard of, to buyers most Americans have never met.

For decades, the story of who bought that paper was simple. Japan bought it. China bought it. Oil-rich Gulf states bought it, recycling their petrodollars into the world's safest asset.

But that story is changing.

Japan is still America's largest foreign creditor, holding $1.117 trillion (1) in Treasuries. The U.K. is second, at roughly $940 billion. China, once the second-largest holder of U.S. debt on earth, has cut its position for over a decade — from a peak above $1.3 trillion to around $633 billion today, roughly half what it once was.

Zoom out, and the trend is stark: Foreign governments — the central banks and sovereign wealth funds that once behaved like buy-and-hold anchors of the market — now hold only about 12% (2) of outstanding Treasuries, down from roughly 40% in the years around the 2008 crisis.

The people who used to show up and buy America's debt almost on autopilot are increasingly sitting on their hands.

The unsettling answer

So who's filling the gap left behind — not just by foreign governments, but by the Federal Reserve itself, which has spent the last few years pulling back its own Treasury holdings as part of a separate policy called "quantitative tightening"?

According to BNP Paribas' research (3), citing the Fed's own financial accounts data, the buyers who have stepped in to absorb the Treasuries the Fed stopped buying are mainly American households and money-market funds.

Domestic banks have been adding to their piles too. U.S. banks added another $65 billion (4) in Treasury securities in the first quarter of 2026 alone, pushing their total holdings to $1.8 trillion — up from just $700 billion before the pandemic.

In other words: the government isn't selling its debt to foreign powers anymore so much as it's selling it back to you — through your money-market fund, your bank's balance sheet, your pension, your insurance policy. All of these institutions hold Treasuries as a core part of how they manage risk, which means a rising share of the government's own borrowing is running straight through the accounts millions of Americans think of as untouchable.

And it doesn't stop there. A growing slice of the buying is now coming from leveraged hedge funds — many of them domiciled offshore in places like the Cayman Islands — who are more likely chasing short-term trading profit than betting on America's fiscal future. Analysts who study the plumbing of the Treasury market have flagged (5) this as a real vulnerability: these funds can unwind their positions in days, not years, and something close to that happened during the market seizure of March 2020.

And waiting quietly in the wings is the one buyer that should make every saver's ears perk up: the Federal Reserve itself. The Fed's balance sheet exploded during the pandemic, then spent more than three years shrinking — but it's already started buying again. Barclays, JPMorgan and TD Securities (6) have all revised their 2026 forecasts upward for the Fed's Treasury bill purchases, with Barclays projecting the Fed could end up absorbing more than half a trillion dollars of Treasury bills this year alone.

Ray Dalio, founder of the world's largest hedge fund, Bridgewater Associates, has put it bluntly on what's coming for America's debt burden: "There won't be a default — the central bank will come in and we'll print the money and buy it. And that's where there's the depreciation of money."

In other words, the government may never technically run out of dollars, but those dollars can lose value fast.

That erosion in the value of the dollar is already visible. According to the Federal Reserve Bank of Minneapolis (7), $100 in 2026 has the same purchasing power as just $11.61 did in 1970.

The good news? Savvy investors have long found ways to protect their wealth, even when Washington's fiscal math stops adding up.

A safe-haven shines again

To shock-proof your investments, Dalio emphasized the value of diversification and highlighted one time-tested asset in particular.

"People don't have, typically, an adequate amount of gold in their portfolio," he said. "When bad times come, gold is a very effective diversifier."

Gold has long been considered a go-to safe haven. It can't be printed out of thin air like fiat money and because it's not tied to any single currency or economy, investors often flock to it during periods of economic turmoil or geopolitical uncertainty, driving up its value.

Over the past five years, as inflation continued to chip away at the purchasing power of the dollar, gold has climbed 152%.

Other prominent voices see further potential. JPMorgan CEO Jamie Dimon has said that in this environment, gold can "easily" rise to $10,000 an ounce.

One way to invest in gold that can also provide significant tax advantages is to open a gold IRA with the help of Goldco.

Gold IRAs allow investors to hold physical gold or gold-related assets within a retirement account, thereby combining the tax advantages of an IRA with the protective benefits of investing in gold, making it a compelling potential option for those wanting to ensure their retirement funds are diversified during rough economic times.

Goldco offers free shipping and access to a library of retirement resources. Plus, the company will match up to 10% of qualified purchases in free silver.

If you're curious whether this is the right investment to diversify your portfolio, you can download your free gold and silver information guide today.

A time-tested income play

Gold isn't the only asset investors turn to during inflationary times. Real estate has also proven to be a powerful hedge.

When inflation rises, property values often increase as well, reflecting the higher costs of materials, labor and land. At the same time, rental income tends to go up, providing landlords with a revenue stream that adjusts for inflation.

Over the past ten years, the S&P Cotality Case-Shiller U.S. National Home Price NSA Index (8) has jumped by 87%, reflecting strong demand and limited housing supply.

Of course, high home prices can make buying a home more challenging, especially with mortgage rates still elevated. And being a landlord isn't exactly hands-off work. Managing tenants, maintenance and repairs can quickly eat into your time (and returns).

The good news? You don't need to buy a property outright or deal with leaky faucets to invest in real estate today. Crowdfunding platforms like mogul offer an easier way to get exposure to this income-generating asset class.

As a real estate investment platform offering fractional ownership in blue-chip rental properties, mogul gives investors monthly rental income, real-time appreciation and tax benefits — without the need for a hefty down payment or 3 a.m. tenant calls.

Founded by former Goldman Sachs real estate investors, the team hand-picks the top 1% of single-family rental homes nationwide for you. In other words, you gain access to institutional-quality offerings for a fraction of the usual cost.

Each property undergoes a rigorous vetting process, requiring a minimum 12% return even in downside scenarios. Across the board, the platform features an average annual IRR of 18.8%. Offerings often sell out in under three hours, with investments typically ranging between $15,000 and $40,000 per property.

Another option is Lightstone DIRECT, which gives accredited investors access to single-asset multifamily and industrial deals.

Lightstone DIRECT's direct-to-investor model ensures a high degree of alignment between individual investors and a vertically-integrated, institutional owner-operator — a sophisticated and streamlined option for individual investors looking to diversify into private-market real estate.

With Lightstone DIRECT, accredited individuals can access the same multifamily and industrial assets Lightstone pursues with its own capital, with minimum investments starting at $100,000.

Build a strategy for uncertain times

Real assets can offer a way to hedge against America's increasingly shaky fiscal outlook. But the right strategy depends on your broader financial picture, including your income, debt, retirement savings, investment goals and tolerance for risk.

For investors with substantial portfolios, those decisions can become increasingly nuanced. Managing withdrawals, minimizing tax exposure and keeping a long-term plan on track often require greater coordination and strategic planning.

In these cases, working with a financial advisor can help reduce costly mistakes.

If you have a portfolio of $250,000 or more, platforms like WiserAdvisor can connect you with vetted professionals who specialize in this kind of planning.

Simply answer a few questions about your savings, retirement timeline and overall investment portfolio.

From there, WiserAdvisor reviews its network to match you — for free — with up to three vetted, reputable advisors aligned with your specific needs.

You can then schedule no-obligation consultations with your matches to determine who is the best fit for your long-term goals.

WiserAdvisor is a matching service and does not provide financial advice directly. All matched advisors are third parties, and specific financial results are not guaranteed.

The US is now buried in $40T of debt — but who’s buying the IOUs right now? Here’s the unsettling answer for Americans

Must Read

The unsettling answer

A safe-haven shines again

A time-tested income play

Build a strategy for uncertain times

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