their retirement. The U.S., however, has been the beneficiary of two unusual factors. First, the Social Security Trust Fund took in more revenue through payroll taxes leveraged on Baby Boomers than it needed. Ideally, this money should have been invested to be available when the Boomers retire. In reality, the Fund was "loaned" to the government to finance increased deficit spending. This interest-free loan helped keep Treasury Bond interest rates low, allowing more debt financing. However, it's not really a loan, since it can only be repaid by increased taxes when the Boomers do retire. Second, foreign countries increased their holdings of Treasury Bonds as a safe haven, also keeping interest rates low. These holdings went from 13% in 1988 to 31% in 2011. During the recession, countries like China and Japan increased their holdings of Treasuries to keep their currencies low relative to the dollar. Even though China warns the U.S. to lower its debt, it keeps buying more Treasuries. For more, see How China Affects the U.S. Economy . Foreign Ownership of U.S. Debt: As of June 2012 (most recent data), foreigners held $5.52 trillion, or 1/3 of the U.S. debt. China holds $1.164 trillion and Japan owns $1.119 trillion. The oil exporting countries are the third largest holders, at $261 billion, with Brazil next at $242 billion. The Caribbean Banking Centers are fifth, holding $240 billion. The Bureau of International Settlements suspects that much of the holdings of the Caribbean centers, as well as Luxembourg (holding $134