If we want to talk about dollar dominance, then since the dollar is a currency, we need to know the history of the currency. In the beginning, there were many versions of the currency. Starting from stones, many strange things have been considered as currency by people long ago. But everything that has been used as currency had a problem. That is acceptance for everyone. Not everyone considered it equally valuable. For this reason, no established currency could become the currency of the whole world at once, until gold came.
SourceWhen gold first came into the world, the whole world gradually agreed that gold was something that we could use as a media of exchange. If I was given gold, I would easily accept it. And if I gave someone gold and asked for something from him, he would also take gold from me and give his thing, because he knew that others would also accept gold. Gold became a kind of currency, which is called Gold Currency. From then on, the talk of the
Gold Standard also started.Since gold is a very expensive thing, it was also used to judge good and bad. Thus, the Gold Standard was set and the whole world started accepting gold.
In 1944, when the Second World War was ending (as you know, the Second World War took place from 1939 to 1945), the presidents of 44 countries sat in a meeting in a place called
Bretton Woods in America. Because the world had become very globalized at that time. When the First World War took place, there was no such modern way of fighting. In the Second World War, one country was trading with another country, people could make coming and going. The globalization thing had already begun.
SourceBut after globalization started, the problem came again. Every country has its own currency. Britain has the pound, America has the dollar, other countries also have their own currencies. Every country thinks that their country's currency is the strongest. To solve this problem, the presidents decided that they needed a Universal Currency against which they could exchange their own currency.
Then in 1944, America had more than 50% of the world's gold. So everyone pretty much agreed that gold is the strongest and gold is the globally recognized currency. So it was decided that from now on, one country will use the US Dollar while doing business with another country. They will use their own currency within their own country, but the US Dollar will be used in international transactions.
America says "Don't worry about the dollar, because each American dollar means 800 mg of gold." So if anyone wants to buy something from another country, he will give dollars, and if he wants, he can return that dollar to America and get 800 mg of gold. This is how we stayed on the Gold Standard, but the currency is only the US Dollar. Since this decision was made in Bretton Woods, it is called the Bretton Woods Act.
After that, for many years, people accepted the US Dollar worldwide. Because people know that one dollar means 800mg of gold. Although no one is taking gold directly, they are just keeping dollars.
But the problem started around 1971. Then America's decline gradually started due to various wars. America got involved in various wars and its dominance started weakening. Other countries then started thinking "Why should I use the American dollar?"
First, Germany returned all their dollars and converted them into gold. Then other countries also started returning dollars. Switzerland converted about
50 million dollars into gold.Then America realized that if they returned all their gold, there would be a huge problem the global dominance of the USA would end. Because then no one would use the dollar anymore. To solve this problem, President Nixon made an announcement in 1971. He said "From now on,
the American dollar will no longer be linked to the gold standard." This is called the Nixon Shock.
Source This means that if you had 1 dollar before, you had 800 mg of gold. But after this announcement, that was no longer the case. From now on, America can print dollars as much as it wants. The dollar came out of the gold standard.
From then on, the rule of Supply & Demand was introduced in the market. That is, the price of anything will be determined by the supply and demand.This decision was taken overnight at that time. Then the price of everything in the American market suddenly increased, and huge inflation was created.Then the American government issued an
Executive Order, which said that for the next 90 days, no businessman could increase the price of anything and no one's salary could be increased. Along with this, many types of taxes were imposed on imported products, so that people buy more American products. It worked very well. After that, people started using dollars again and started believing in them.
Then everyone, including other countries in the world, started believing in the dollar again. When the US government saw that the dollar was no longer linked to gold, yet the whole world still considered the dollar as a global currency, they gained a huge power. That is, earlier they could not print dollars as they wanted, because to print dollars they had to have an equal amount of gold. But since 1971, they have been able to
print dollars as they wanted.This responsibility falls on the Federal Reserve Bank, which is actually a private bank in America. America is the only country in the world where the responsibility of printing dollars is in the hands of a private bank. The year 1971 is considered the most important year in the world of economics.
Since then, different countries have tried to reduce the dominance of the dollar separately or together, but have not been successful.
China, Russia and Iran have been seen taking various measures to get out of the dollar the most. They have tried to find different ways to get out of business through dollars. After the US sanctions on Iran, they have tried to run their business activities globally through euros and rupees. An agreement was made between China and Russia that they would conduct business activities between their two countries through their own currency so that
de-dollarization could be created through this.
Finally, I would like to ask a question, that is, when Bitcoin is accepted by all countries in the future, is it possible to make business by Bitcoin globally ?
