You've probably heard the term "Reserve Currency"

It's referring to the US Dollar.

If you've ever wondered how the Euro and the Pound are valued higher but the debt ladened US Dollar is still the one the world compares itself to.. I'm going to explain why as briefly as I can in this post..

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After World War ll many countries were in shambles, economic insecurity was wide spread and countries were looking for a way to generate growth and provide stability for their nations.

Enter the Bretton Woods Convention in 1944

All 44 NATO member countries sent a total of 730 delegates to a small town in New Hampshire named Bretton Woods, for three weeks of meetings to discuss a wide array of topics.

The main focus was monetary policies, mostly to provide financial stability and promote economic growth for their nations. This is where they first established the IMF, the International Monetary Fund.

It was agreed upon that all the NATO's countries would execute trade on an adjustable system for exchange with their currencys being backed by gold.

Post WWII and America was Thriving

The US industrial sector was well established because of the war. Factories were booming, the US was oil rich and trade was flourishing.

Couple that with the fact North America's geographical location made it a safe haven, as compared to most of Europe and Latin America, so other countries put faith in the US dollar over most other currency options.

Nations viewed the US powerful both militarily and economically so the US dollar was the one countries started to invest in and accept for trade, it was seen as the safest option for nations to build up their reserves in US dollars.

It didn't take long until 65% of all US dollars ever printed were now owned by other countries.

Petro Dollar Power

US dollars were readily accepted and easily recognized across the globe. Because of this oil trade was conducted in US currency and that's how the USD became the "Petro Dollar" of choice. It made exchange easy and countries trusted it.

The US dollar keeps spreading further across the planet, nations have been heavily investing in it and trust it to provide them with economic security.

To conduct trade countries need large caches of greenbacks and nations with less powerful currencies hold on to their US dollars from trade. Years of trust has led them to believe the USD will always remain strong and at any point those dollars could be exchanged for their value in gold bullion so it was a good investment to stockpile them.

Now The Deception

Fast forward 30 odd years and America's economy started to slump, debt was rising and Congress was worried that the United States would be pulled into a bad recession.

In 1971 Richard Nixon unpegged the US dollar from the Gold Standard to try to get America out of their economic woes. Other nations followed suit.

Money actually being back by real worth disappears quickly and this is where countries and citizens debt loads started to explode.

It had the reverse effect it was intended.

Fiscal responsibility was thrown out the window because the United States could just keep printing money without the fear of having to have it backed by real worth, gold.

Now the new money being created in America wasn't backed by anything, US dollars couldn't be exchanged for its value in gold bullion and the only thing giving the dollar value was faith that America would stay strong.

It's Too Late, The USD Dominates

Other nations were already so reliant and heavily invested in the greenback that it was too late to change course or fight back. They had massive stockpiles of worthless paper.

70% of every dollar ever printed was now circulating outside of the United States.

Nixon was betting countries would keep using the greenback and continue trading and paying for oil in it and he was right.

Everyone Loves a Conspiracy

Many people believe it was at this point the US started selling off it's gold reserves and paying down debt and funding wars.

Without countries being able to redeem their US dollars for gold this provided America with breathing room to cover up how far in debt they were actually sinking.

Today the US owes over 20 trillion dollars. Of all the world's debt 63% of that is owed by America alone.

There's been nations sign deals such as OPEC that allows other oil producing countries to pay for oil in different currencies other than the USD, but so far the dollar has not lost its place as the world's preferred reserve currency due to the sheer fact there's so many dollars circulating throughout the globe.

If you go to any corner of Earth the USD is recognized and accepted.

China Is a BIG Player

China has expressed interest in trying to replace the USD but it would have to make up so much ground many don't see it feasible at this point.

China also owns 19% of America's debt so it wouldn't make sense for them to try to devalue the Greenback except for one catch.. China has massive gold reserves and they're betting the US doesn't have what they say they have in their reserves.

China is also playing a long game because they know America can't keep running up it's debt at such a rate. Meanwhile they're buying incredible amounts of gold and waiting on a historical wealth transfer the likes the world has never seen!

China produces goods and the United States consumes them. Americans owe $4 for ever $1 they earn, it's a debt based economy and that can't sustain itself for long.

Many people believe the numbers America claims to have in their gold vaults has long been sold off. They haven't done a proper public audit since shortly before Nixon took America off the gold standard.

Pretty convenient wouldn't you say?

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*I wanted to keep this short and this happened,..hopefully it's not too rambly it's incredibly late. I'm going to bed 😐

Thanks for reading,

@goldenarms

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