10 dollars is not a lot of money, it might be enough for a meal but nothing beyond that.
However, if you have 10 bucks in your pocket and no debt at all, you are literally wealthier
than 15 percent of Americans.
Just think for a moment what does that means, in the wealthiest country in the world, 14
percent of household, have negative wealth and 1 percent with absolutely no wealth at
all.
Wealth inequality seems to keep growing, maybe because these greedy capitalists love the
dollar.
But you know who else loves the dollar, the entire world!
US dollars are so popular that they are used like Gold all around the world.
But why?
why the dollar is the global currency of the world and not any other currency.
In order to find that out, we have to take a look back the at the history.
You see, for much of history, we have used gold as a form of money, even when we moved
to paper money, they were still backed by gold and that was known as gold standard.
In fact, the Gold standard existed as recent as 1971, which is less 50 years ago.
You see the problem with the paper money is that sometimes government get into trouble,
so they start printing a lot of money and that causes inflation.
Which means the money that you worked so hard to earn, suddenly becomes less valuable or
sometimes absolutely worthless.
And secondly, international trade was impossible with paper money.
What happens when you want to sell your goods to a neighboring country that has its own
currency.
You will have a difficult time figuring out how much each of your papers worth.
In the past, it was simple, because everyone just traded with gold.
However, if both of your paper money is backed by gold, its easy to agree on an exchange
rate.
And the government can't simply print more money and cause inflation because every bill
should be backed by gold.
That's how the gold standard was born.
However, in 1914, world war one broke up and Europe found itself in absolute chaos.
Wars aren’t cheap, especially when the entire world is involved, you need to pay the soldiers
to stand by your side, buy them weapons to fight with, and food to feed them up.
So, everyone turned to the United States for help since it wasn’t directly involved in
the war and had the economic power to do that.The war was long and expensive.
Within the next few years, European countries had to abandon the gold standard one after
another because they spent most of their gold reserves to finance the war and went under
huge debts.
By 1920s, when the war ended, the US dollar was the only currency backed by gold which
made it one of the most popular currencies in the world.
The only competitor that Dollar had was the British pound.
However, even Britain had to get out of the gold standard due to extremely high war expenses,
which only made the US dollar the only stable currency in the world.
Despite the great depression, the United States didn’t abandon the gold standard.
The next step that made the dollar truly the only international currency in the world was
the World war 2.
It was a way bigger and more distractive war, the allies had to spend every dime they had
in order not to lose the war, meanwhile United states was enjoying a massive inflow of gold
from the rest of the world.
And by the end of the war, the world found itself in a very awkward situation where United
stated had 70 percent of global gold while the rest of the world shared the other 30
percent.
So united states proposed to tie every currency to the dollar while the dollar will be tied
to gold which came to be known as the Bretton Woods system.
If one country wants to trade with another, they would only use dollars since it is the
only currency that you could exchange for gold.
and within the next couple of decades, countries all around the world collected tons of dollars
and in 1965 France decided to exchange their dollars to gold.
They literally sent a ship full of dollars and got in return and a giant ship loaded
with gold.
Soon, other nations followed, but the US realized that they have printed far more dollars than
they should have, so instead of exchanging everyone dollars to gold, they simply took
the dollar out of the gold standard in 1971.
But surprisingly, the world didn’t stop using dollars since the United States was
still the largest and the most stable economy in the world.
And that's how we moved from gold-backed currency to fiat money with no intrinsic value at all.
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