The Bretton Woods monetary system, which was established after World War II and solidified the U.S. dollar’s place as the world’s reserve currency, is collapsing before our eyes. That’s too bad, because that status may be one of the last assets the American people have left in the global economy.
For the past 65 years, that status has guaranteed a greater demand for dollars worldwide since it can be used in most transactions. This has resulted in commodities priced in dollars, generated for a larger flow of capital back to the U.S., and allowed the nation to borrow at low interest rates.
The premise for the dollar’s special status was two-fold. The first was military supremacy and the wide protection offered by courageous U.S. forces abroad. For other nations this has meant having a strong ally against potential invaders, but also protected trade routes, and access to wide markets and first class technology. By and large, the U.S. has kept up this part of the bargain.
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