Exorbitant Privilege : The Rise And Fall Of The Dollar

Chapter 11: Global negotiations leave groups more fortunate. A government that is purposefully maintaining inflated currency is robbing buyers of imports and creators of exports. A deflated value has an opposing effect, making imports cheaper and exports less challenging. One piece of currency across the west reduces negotiations and encourages price transparency. However, the United States as an individual country are

To discuss its historic background I will concentrate on the Bretton Woods System. Bretton Woods System is an international currency system started form 1944 July at the end of the Second World War. This system require each country to obey the rule that they tied its currency to gold in order to keep the exchange rate stable and prevent the currencies from devaluation. The establishment of this system ensure the resume and development of capitalist world economy especially America. Although this system ultimately disintegrated in 1973, it still make significant contributions to America’s irreplaceable role today.

The US dollar is used in the majority of the international transactions and therefore that happens to the American economy, will influence the international financial resources. Dollars bring big consequences both for the USA and for other countries. The economy of many countries depends on currency dollar. The increase in its course reduces the volume of the income in dollars for the country. And change of US dollar more considerably, than change of an exchange rate of the country. On the

“Money talks” is an expression many form as a simple analogy to the problem associated with wealth today. However, the value of money is not to be taken in vain as money does not always showcase the attributes of knowledge and power. At the same time, those who do possess money do, in some cases, possess the attributes commonly associated with the wealthier class. “Money and Class in America” wrote by Lewis Lapham in 1988, showcases the pessimistic feelings Lapham has towards the American faith in money. Lapham believes that Americans are at a loss to hold the majesty of money at bay. Though I agree with Lapham to a point, I also believe that the assumptions of Americans do apply to a point.

The U.S. dollar peaked in value in 2000-2001 and has been in a significant decline ever since. There was a relatively brief period in 2008 when the dollar rebounded quite sharply due to the worldwide financial crisis and economic meltdown, when there was a global rush to the safety of U.S. treasury securities. But since then, the dollar has resumed its long-term downtrend. In the recent years the dollar has been improving relative to other currencies, becausee of the decline in those other currencies.

There is perhaps no other political issue in our contemporary society that is more pertinent, pervasive, and encompassing than a nation’s economy. From the first coins used in Greece and the Asia Minor in the 7th century BCE, to the earliest uses of paper money, history has proven time and time again that the control of a region’s economy is absolutely crucial to maintaining social stability and prosperity. Yet, for over a century scholars have continued to speculate why the United States, one of the world’s strongest and most influential countries, has one of the most unstable economies. Although the causes of this economic instability can be attributed to multiple factors, nearly all economists agree that they have a common

Jack Lew said, "With such a wide reach, America's currency makes a statement about who we are and what we stand for as a nation.”

Ever since the Bretton Woods agreement in 1944, the U.S dollar became the world’s currency. Bretton Woods agreement was basically an agreement on which every country currency would be back up by the dollar, due to the fact that after WWII United States was the only one with the biggest gold reserve in the world. Although it was proposed as a good idea it had its flaws for one even though it help the U.S and other countries there was simply not enough gold to continue backing up the dollar value. Which lead to President Richard Nixon to abolish the gold standard economy. His abolish of a gold standard economy lead to a new proposal on which the dollar would be back by.

Strength can be evaluated in many different ways: from economic power, to militaristic prowess, to influence in foreign countries. Today, America seems to be the most powerful nation on Earth when all of these categories are taken into account. The economy of the United States is so strong, that it’s GDP accounts for 22.44% of the gross world product. The U.S. economy is worth 17.41 trillion dollars: trillions of dollars more than the world’s second most powerful economy: China. Outside of the U.S, seven sovereign nations (such as Ecuador, El Salvador, and Zimbabwe) use the U.S. dollar as their official currency (8), demonstrating the

The financial crisis of 2008 has been described as the worst financial crisis the world has seen since the great depression, but there are now murmurings of the potential for an even greater financial crisis, a currency crisis, caused by the demise of the US Dollar. The Dollar has been the reserve currency of the world since it took over from the Pound at the end of world war two, but we examine if it is about to crash spectacularly?

There are many reasons why the dollar would fluctuate. The strength and weakness of a dollar depends on a number of factors such as inflation and trade deficits. To save the economy from inflation, the Federal Reserve will increase interest rates causing the economy to slow and the value of the dollar to decrease. Trade deficits can also devalue the US dollar. Although the high trade deficit is causing the dollar to fluctuate, the deficit could be a way to make the dollar stronger. Because we are borrowing from other countries, with our interest rates being higher, they would want to buy the US dollar to invest in the interest rate market.

Inequality in the society has been an issue since the history of the universe and as we think we are bridging the gap between the rich and the poor we always find out that it is as a wide as it was. The poor will always exist in the society as the inferior group while the rich are the superiors who control various aspects and sectors of the society.

Deutsche Bank (Karczmar, 2004) suggests that the euro could eventually challenge the dollar as a reserve currency, but the euro is still far behind the U.S. dollar as a reserve currency, representing just 24.2 percent of the world banking reserves in the 2013 third quarter (International Monetary Fund, 2013). Numerous economists endorse the United States’ ability to safely continue its external deficits. Cooper (2001) poses the argument in its simplest form:

The three major international economic institutions are the International Monetary Fund (IMF), the World Bank and the World Trade Organization; this book mainly focuses on the IMF and the World Bank, due to the author’s first-hand experience with both institutions. The IMF, a public institution built as a guiding hand for economic stability around the world, has brought false

1. The gold standard and the money supply. Under the gold standard all national governments promised to follow the “rules of the game”. This meant defending a fixed exchange rate. What did this promise imply about a country’s money supply? A country’s money supply was limited to the amount of gold held by its central bank or treasury. For example, if a country had 1,000,000 ounces of gold and its fixed rate of exchange was 100 local currency units per ounce of gold, that country could have 100,000,000 local currency units outstanding. Any change in its holdings of