China Using Oil to De-Dollarize World

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It’s no secret that the United States of America became a superpower as a result of World War 2. Even before the war officially concluded, the United States secured its long-term economic viability with the Bretton Woods Agreement.

The upshot of that 1944 meeting of delegates from 44 countries in Bretton Woods, New Hampshire was the establishment of both the International Monetary Fund (IMF) and the World Bank. But more importantly, the agreement replaced the gold standard with the U.S. dollar as the global currency. In short, America became the dominant power in the world economy.

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It was a shrewd shift that gave the dollar more value relative to other currencies. But it was also secure and practical: the United States held three quarters of the world’s supply of gold, which made the U.S. the only country with enough gold to back its currency — the dollar — as a replacement for the gold standard.

But this post-war agreement was abandoned in 1971 when President Nixon announced he would unshackle the U.S. from its promise that a dollar was worth 1/35th of an ounce of gold. Since then, the dollar’s value has gone from objective to subjective; from $35 an ounce of gold to whatever people think it’s worth.


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