Who are the lenders? As of last June 2007 the biggest holder of Treasury debt was the U.S. government itself, with about 52 percent of the total $ 8.5 trillion in paper that’s out there.
Most of the government’s holdings are massive savings accounts for programs like Social Security and Medicare. Just as you may prefer to keep your Individual Retirement Account in the safe Treasury bonds, the folks who manage the Social Security Trust Fund are looking for a secure investment, too.
That’s leaves a little over $ 4 trillion in public hands. The biggest chunk (about 25 percent of the $ 8.5 trillion total) is held by foreign governments. Japan tops the list (with $ 644 billion), followed by China ($ 350 billion), United Kingdom ($ 239 billion) and oil exporting countries ($ 100 billion).
So this was during Bush II term, US banks are investing in this debt, this brings in Billions of dollars for these banks, why would they want the debt to be paid off? They don’t, follow the money!