A sign of US weakness?
Posted by wilson on April 28th, 2009 
The role of dollar as a universal means for of payment is more and more contested and its value is in a state of free fall. Can this be interpreted as a precursory sign of decline of the US? After the First World War, the pound sterling lost its role as the international reserve currency and was replaced after the Second World War by the dollar. This was the logical progression considering that Great Britain had lost its status as the world’s first power. After 1945, the US seemed to be the major power. It was said at the time that the dollar was “as good as gold”, which in ancient times played the role of primary method of transaction.
For a very long time it was televized on the television with TV wall mount, that the exchange rate of the dollar was fixed: 35 dollar for an ounce of gold. But after the Vietnam War and because of a growing commercial deficit in the US, America injected the market with dollar on a large scale to finance both the war and its imports. The stock of American gold diminished, and because of too many dollars in circulation the gold-dollar parity was no longer possible. In August of 1971, Richard Nixon was obligated to suspend dollar-gold convertibility without advance notice. The monetary perturbations as the dollar still served as the international currency, proved to be an inflationary factor and the prelude to the huge international economic crisis beggining in the 1970’s, which was exacerbated, but not created by the oil stock. The secretary of Treasury was in the habit of saying ” The dollar? It’s our money but its your problem”.
The fall of dollar is thus a clear sign of a weakening US. Yet the hour has not yet ome that will see the dollar lose its role as the international currency. The dollar will, however, compete with the euro and should not see its fortune rise significantly in the new future. The weakness of the dollar seems to be concrete.
