This chapter investigates cycles of debt crises, which occur when poor countries cannot make the payments on their loans. There are many stories of how debt crises have produced underdevelopment, but one of the most compelling is that of Egypt in the nineteenth century. Of all the nations in the Middle East, Egypt was the most primed to have an industrial revolution. It invested in bona fide development projects, including railroad building, land drainage, and building the Suez Canal. However, it spent a fortune rebuilding Cairo to make it look European and fought wars with Turkey and the Sudan, while its leaders enjoyed pharaonic lifestyles. By the mid-nineteenth century, Egypt was heavily in debt. A similar process occurred in Latin America when it got itself into serious debt problems in the 1970s. Some of the money went to development projects, some went to antipoverty projects, and some was just siphoned off. Venezuela's elite bought more foreign assets in 1981 than the entire value of the loans that were negotiated that year. When the crunch came, the International Monetary Fund insisted that the Latin American governments shrink their government expenditure in order to pay their debts. This meant that most nations in Latin America reduced their expenditure on public health and hospitals, education, and programs for the poor.