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
It’s very important to understand that Foreign Aid is one of the biggest tools in what’s considered ‘Soft Diplomacy’. The US, as one of the largest and most powerful nations has a lot of ways to influence foreign policy to align with it’s interests, and the money we send to other countries is a huge part of that. It helps with trade deals, military posture, and it can be a good preventative tool to prevent what the US considers hostile interests (China/Russia/Iran) from influencing other nations against us. None of what the US gives to foreign countries is without getting something in return, and there is a part of the aid that truly is in the vein of “developing the whole world benefits the whole world” so it’s overall a net positive. It’s also more popular than trying to replace foreign leaders, install “puppet governments” and other unsavory actions that countries have been doing for years.
China’s “Belt and Road” initiative is a similar policy that they have for building infrastructure in poorer nations, but there have been cases where the projects funded by the Chinese government have been used to strongarm nations, because of interest rates and the way the contracts are written. If I remember one incident correctly, the CCP built an airport, only to take complete control of it after a couple years down the road because the nation it was built in wasn’t able to make their payments.
The short answer is that debt doesn’t matter if you’re the one printing the money and when no one of your lenders wants you to go bust.
America has debt in the currency that they issue. Which means that they can’t go broke. It doesn’t work like personal finance
They spend more than they make, and the federal reserve monetizes the debt that the US makes, so our money goes down in value.
It gets approved, because congresspeople don’t really care about the long term effects as much as their pet projects being funded. This is an example of a commons problem.
Also remember that governments print money at will. The “debt” is all just a bunch of numbers that are always balanced out as needed…the talks of passing it down to other generations is BS.. political BS
While other comments about the nature of military aid and how government debt is different than personal debt are very true, we don’t even need to get that in depth.
Imagine if I asked, “how can someone afford buying a gift for their kids, if they still have a mortgage out on their home?”
While this person is in debt, this doesn’t mean they don’t have any money. Debt is not a negative bank account, it’s basically just borrowing from the future because you believe it’s better to spend the money now.
Also, when the US gives money to other countries, it’s not purely altruistic. The US (and the world as a whole) benefits MASSIVELY from international trade and stability, and spends money to maintain this.
You should read the confessions of an economic hitman, basically US foreign aid has a lot of strings attached meaning it’s almost always spent in US companies boosting the US economy, it’s basically sneaky socialism just like your military complex.
The money the US “gives” to other country isn’t charity.
It is money used to buy influence and power and control and stability and to help the US economy.
Think less food to starving kids and more bribes to rich dictators to let US companies exploit natural resources.
Much of the foreign aid is in the form of gift cards for the US military complex. The aid recipient doesn’t get money they get to buy goods from US weapons manufacturers with US taxpayer money.
This helps the US economy as the factories and the workers that make the stuff pay taxes in the US and spend their money in the US.
It also appears to reduces prices the for the stuff the US government buys for its own military, because it can be produces at greater scale.
It makes the recipient country dependent on the US for parts and maintenance and prevents them from ever going to war with the US or any country the US is protective of with those systems.
It also makes it harder for other countries to compete with their military exports and makes their military more expensive.
So the US by giving other countries military aid buys itself influence and a more powerful military.
Foreign aid also helps to stabilize countries, that is keep those people who are currently in power in charge and makes the place easier for US companies to do business with or exploit.
Most of the aid the US (and other countries) give out is carefully coordinate to make the US, or at least the rich people in the US, more money.
It is an investment.
You can tell that much of it is not selfless charity by the fact that generations of US leaders and foreign policy decision makers who didn’t have a single charitable bone in their body pursued those goals. Do you think Henry Kissinger was and altruist and humanitarian?
You have to consider the effect of ‘soft power’ on international trade, something that directly affects the wealth of the top 10% who lobby politicians to be able to make more wealth for themselves. If you really believe that overseas aid is about taking care of the poor and needy around the world and that politicians don’t buy shares in those corporations I have a bridge to sell you. Those lower income ‘socialists’ who pay the bulk of the taxes don’t get their snout in the feeding trough nearly as much. Tax breaks for corporations? Bank and motor industry government bailouts? Over bloated budgets for the military industrial complex? That’s not socialism that’s protecting economic growth.
# “Fugayzi, fugazi. It’s a whazy. It’s a woozie. It’s fairy dust.” The money only exists if you believe it exists
Latest Answers