Foreign Debt

See: Foreign Bond.

Foreign debt is just what it sounds like: debt that is foreign. When one country owes another country money, you’re staring in the face of stone-cold foreign debt. While foreign debt is often country-to-country, the World Bank and similar international organizations function as a way to provide good loan rates to developing countries.

The U.S. has a lot of foreign debt. Like...a lot. But many economists argue that that’s actually a good thing, since it means that all that debt equals current value to Americans. Just as when you take a mortgage, sure...having it kinda sucks...but hey, it’s worth it because now you have your house!

Because the dollar is strong and used as a neutral currency abroad, many economists think the U.S.’s large foreign debt is a-okay. The modern era: Enjoy now; worry later. Or let another generation worry. Yeah, we are oh so not The Greatest Generation.

Other economists point out that times are changing. While everything used to bear “Made in China” stickers, more and more factories are moving from China to Africa. China is on the uptick, where quality of life and GDP have been increasing. Rather than the US and European nations running everything, China is starting to come into its economic own.

For instance, China is a huge (the hugest) funder of African development. America pumped economic value into and from China, and China is doing the same to Africa now. There’s even a name for it: the “Sino-Africa friendship.” Others call it a “debt trap,” since Africa is now severely indebted to China.

Friendship or exploitation? Maybe a lil' of both.