The American Dollar, World’s Major Currency, is 75 Years Old
In 1944, approximately about 75 years before, above 700 legislatures which were from exactly 44 nations had their journey to a private resort in the hills of Bretton Woods, New Hampshire. In the hotel of Mount Washington, World War II on edge, they arrived to hit a new financial structure for the global economy. The gettogether at New Hampshire’s Bretton Woods gave rise to the International Monetary Fund, i.e., the World Bank. The meeting had also offered a new role to the American dollar, i.e., international reserve currency. After that, the U.S. dollar has gained importance in the global market, and the entire world uses it for trading.
After that, the U.S. had regulated the majority of the world’s gold. During the Bretton Woods event, the nation had promised to set the price of the dollar to gold almost $35 an ounce. Following the move, other countries had set their exchange value to the dollar. As a result, the dollar has become the mid-point of the system and the global economy. The US began to racking up massive deficiencies and running out of its gold assets in the 1960s. As a result, the federal government found it much big-budget to hold the promise. Thus, in 1971, President Nixon settled breakup between gold and the dollar. Currently, the value of the dollar is set by the combination of financial and civil forces starting from judgments of the central bank to the frenetic procurement of traders across the globe.
The original strategy set at Bretton Woods is no more from many years. Still, the dollar holds the position of the international reserve currency. Thus the US remains private and wealthy under this exorbitant privilege system. Dollar-backed and dollars securities such as US Treasury bonds, i.e., how the government deploys debt, are much more engaging. Several countries, for example, save by purchasing US debt. Even China secures a trillion dollars of the US debt. If the US diminishes its currency, which means it devalues its debt. For instance, when Argentina borrows money in dollars, it is the kindness of either direction dollar are shifting in. Many US companies have received benefits from this structure, which includes trading in dollars and avoiding the cost required for currency conversion.