How US Dollar became the world currency?

Earlier in 20th century dollar was tied up with gold. It didn’t move up nor moved down and remain equal to the value of gold. But the Great Depression of 1921 to 1929 bought a change in US government policy which had to remove the backing up dollar by gold in turn it started creating its supremacy in world economy. Till this time US was leading the world economy but was not a single empire.  During this era the dollar was not exchanged into gold so the US citizen could not rip any benefit from their money but it was well convertible into gold by other government reserves. Due to this policy of changing dollar with other countries made a United States a reserve heaven and huge amount of gold started flooding in US market. This made United States dollar a reserve currency of world. This was more possible also because during the WWII  when US supplied huge amount of dollar to other countries in demand of gold which had created a significant amount of golf reserve in US.

Though countries were exchanging gold with US dollar but United States had never promised to change it back to dollar once the war was over. Hence, after few years many countries had almost exhausted their gold reserve and had huge amount of dollar in their reserve. This led to position when countries had to accept USD as the world currency which is present as of today.

When in 1970s countries demanded back their gold in exchange of dollar then, the US government pulled its hand back and defaulted. After few years having a huge reserve of golf, US suddenly declared it an empire and started leading the world economy. Once the dollar had become the world currency, US government since then is working hard to keep that status alive and is exchanging other economic goods with other countries and making them keep those deprecating dollar with them.

This entry was posted on Thursday, December 20th, 2007 at 7:01 pm and is filed under Dollar Dollar, US Money Market, Dollar Exchange, Dollar trade, US Dollar. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.