How is the United States able to give billions to other countries when we are trillions in debt and how does it get approved?
In: Economics
The US operates on a fiat currency that’s very loosely backed by oil. A first curvy operates off the scarcity of the currency instead of the scarcity of a commodity like previous metals. The life cycle of a fiat currency is: supply, circulation, and death.
Supply is managed by government contracts, employment, grants, and budgets. To a certain extend, also loans (this is very complex and also functions in the death part of the cycle.
Circulation is where the money circulates between private and personal interests. This produces the GDP. When you pay somebody out somebody pays you, this is circulation. This is where money should be doing “work,” which is what produces tangible goods and services.
Death is taxes. If the government only puts money into the economy, that money will quickly become worthless nexus it’s no longer scarce. This is currency inflation and should be managed against “buying power.” When you pay federal taxes, the government destroys that money. Those federal loans mentioned earlier is another way to take money out of the economy and that is also why loan interests fluctuate. When you get a loan, the bank creates an account with a negative value from the fed at the federal interest rate + your interest rate. The bank acts as a gatekeeper, taking their toll. As you can see, we have a major problem with this system, and that it is that you need to tax where the money is pooling, and we don’t do that, hence the wealth gap, but that’s a different story.
When we offer foreign aid, it’s very rarely in money. It’s often in assets, such as food, shelter, supplies, arms, etc., often, it’s shit we just have laying around. Like our aid to Ukraine was ancient equipment that was going to be more expensive to decommission. Which was a huge deal because we discovered our most antagonistic peer couldn’t stand up to our archaic weapons from 20+ years ago when wielded by farmers and mechanics. When we send food to places like Afghanistan, we build a reputation with those people that makes them more willing to cooperate if we need boots on ground, saving us a ton of money, too.
Overall, we can aid it because we already have it, and what we don’t have, we can print money for and tax it later to Mendon the economy. Literally the only reason we can do it is because we have the buying power to do it and A LOT of slop in our economy to balance it.
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