The U.S. owes almost US$3 trillion to just Japan and China alone as it prints about US$696 million per day. According to the International Monetary Fund (IMF) or the world’s loan shark, China has even passed the U.S. as the world’s largest economy.
What I don't understand is why does the US own Japan and china so much? Why do they even need to borrow so much money when they can just print their own not to mention why would they want to be in so much debt that they can't ever really repay?
The reserve currency country *must* keep accumulating debt, under the modern world system. This also eventually dooms the country to decline, even if no one can tell exactly when or how. That is also in the cards of the system.
The technical reason why Japan and China (and Western Europeans before them, and other developing countries after them) own so many Treasuries and Freddies/Fannies is that they intervened to keep their currencies artificially cheap against the dollar, to boost their exports. The mechanics of this intervention required them to buy dollars with printed yuan, yen, West German marks, etc. This trade surplus helped the countries and governments in multiple ways, and this process also built up (still trusted) dollar reserves which strengthened their defence against financial crises.
Whether these governments choose to buy interest-bearing Treasuries or fill warehouses with dollar cash, what they own is ultimately US debt. (Cash is debt in the sense that it's a promise to be redeemed by goods and services -- the ultimate source of the value of money -- if no longer by gold.)
When there're so many people happy to give Americans real goods and services in exchange for promisory notes, you can't be surprised if the country's elites issue a few more of them than would be prudent.
At a more philosophical level, the reserve currency issuer is the manufacturer of the world's money. It must supply enough money to the world (and the only way to do this is being more and more indebted to the rest of the world, as above) or the world would find some other reserve currency issuer. (See Triffin's Dilemma -- even though it technically applied only to the postwar dollar-gold standard, the basic idea is the same today, as mentioned above.)
In the event, the US "bravely" stepped up to become the world's consumer of last resort. If this cooks the country long-term (since eventually people will stop trusting the currency, as happened to the Netherlands, Britain, and indeed Rome,) that's not the immediate concern of the elites. And other countries being exploited by the US in the short term is also not a concern of their elites -- and indeed this seems to keep those elites in power.
There is a third way. If the reserve currency country refuses to play with the financial pollution of the world, it could have itself a healthy economy and society, if not a globally dominant power. But this would require adopting state-free money, and, unfortunately, the right trade barriers to prevent one's strong money from pricing oneself out of global markets and thus losing money to the rest of the world via current account deficits. Most importantly, in a democracy, it would require a mass awakening.
