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rolled-yuan-bill-on-the-map-of-africa-chinese-investment-in-african-economy-stockpack-adobe-stock.jpg
Rolled Yuan bill on the map of Africa. Chinese investment in African economy

China and Africa: Debt-Trap Diplomacy?

The story of China helping Africa modernize resists simple formulas

Last week, I reported on the accusations of racism on the part of the the Chinese authorities against African residents of the city of Guangzhou in Guangdong province. While Africa and China have enjoyed a seemingly amicable relationship since the 1970s, several African leaders have pointed to the COVID-19 pandemic as highlighting unresolved underlying tensions. One of those tensions is several African countries’ debt burden. China’s response to requests for deferral in the midst of a pandemic has strained Sino-African relations. China isn’t the African countries’ only creditor. As of this writing, G20 leaders will be meeting to discuss debt-relief and extending the Debt Suspension Service Initiative (DSSI). The service has deferred debt payments by poor countries due to the…

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The economic crisis of 2020 with the red arrows indicating the economic recession in 2020.

Inflation Is the Least of Our Worries!

Yet some fear that the inflation dragon is about to roar

The Federal Reserve (the Fed) can throw the economy into a recession whenever it feels that it is in our best interests to be unemployed — typically because the Fed is convinced that an unruly inflation needs to be tamed by the discipline of unemployment. For example, in 1979, as the rate of inflation peaked above 13 percent, the Fed moved to make borrowing prohibitively expensive. When Fed Chair Paul Volcker was asked if the Fed’s policies would cause a recession, he replied, “Yes, and the sooner the better.” Interest rates reached 18 percent on home mortgages and were even higher for most other bank loans. Households and businesses cut back on their borrowing and spending and the unemployment rate…