“When the U.S. government wishes to spend more money than it receives as tax revenue, it covers the shortfall by borrowing, and foreign lenders have become increasingly important sources of such borrowed funds.

Reliance on foreign lenders is as old as the republic. Indeed, loans from the French and the Dutch proved critical in keeping the American revolutionaries afloat while they broke from the British Empire and established their independence. Later, the huge foreign debt became a major reason for the new national government’s assumption of the states’ war debts and for the creation of the First Bank of the United States and other measures Alexander Hamilton devised to establish the new government’s credit.” Read more.

“Foreign Lenders: Friends Indeed to a U.S. Treasury in Need”
Robert Higgs
The Freeman, July/August 2010, Vol. 60, Issue 6.
Via the Foundation for Economic Education.

Image by graur razvan ionut / FreeDigitalPhotos.net.