Take the Marshall Plan for example. The US gave 13 billion dollars to European nations to rebuild their cities. But what is meant by 13 billion dollars? Where does the money come from? Is it paid in gold? Do the countries receive the money, then buy resources with the money? What happens when enormous sums of money is lent, and then the lending country inflates or deflates their currency?
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It depends. There’s no one answer. It can be gold, cash, or more commonly, just credit. In other words, the lender country says “we’re giving you x dollars to buy whatever you want from companies on our country on us” and then the lender country just pays the companies directly for whatever the borrowing country purchased.
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