How the Dollar Got and Retained its Status
Until the end of World War II, a country’s currency was tied to its gold reserves, i.e., a country printed money would stay in sync with how much gold it had. This acted as a check against a country “just printing” away money endlessly. At the end of World War II, Europe (winners and losers) was in shambles with all its infrastructure and industries bombed away. The US, thanks to its geographical separating from all the war zones, came away intact on those fronts. Thus, the US came to dictate the new rules at the end of World War II, writes Dharshini David in The Almighty Dollar : “It named the dollar as the international reserve currency. That meant it was the official reserve currency of global commerce, the one in which international trade would be settled.” Inevitably then, the dollar became coveted. If all inter-country was to be settled in dollars, well then, every country needed to have dollars in hand. To “simplify” matter, only the US dollar would be tied to gol...