Understanding US Debt is one of my aspirations.

When you talk about your usual run-of-the-mill, third world country defaulting on its debt, the meaning is pretty much straight-forward. Countries have debt from International institutions or other countries on which they need to make regular interest payments. Failing to pay up amounts to default.

Now, who does the US owe fund to? To its own public, it seems.

This makes it pretty difficult to figure out what exactly does this mean. Some of the biggest creditors are the retirement and social security funds. This is because common people keep funding these by putting apart of their continous savings into it. These "Pension funds" are essentially cash cows. Thus, they buy up bonds from the government in return of the cash.

Now if the US govt defaults, guess who loses? These funds. Because then the debt held by them will lose its value and it'll be a situation of their funds having made a "bad investment" by investing in US Bonds.

Isn't that neat? The Govt gets to fund itself from people's savings. If it defaults, its the people's savings that gets hit.