All Americans know everything costs a LOT more than it used to. However, many people don’t realize that inflation is driven by how much the value of the dollar has declined in the last 100 years. The chart below shows that the dollar has lost almost all its value.
End of the US Dollar?
The U.S. dollar became the dominant currency in the global economy soon after World War I. The Bretton Woods accord in 1944 solidified its position at the top. Since the dollar has been the world’s reserve currency throughout their lives, many Americans assume it will continue to be so forever – or at least for the foreseeable future.
However, as the chart below shows, there have been several global reserve currencies in the last 700 years – with an average span of 94 years – and two for only 80 years. The U.S. dollar’s dominance will end when a combination of factors causes investors, governments, and markets to abandon it. The U.S. can accelerate the dollar’s loss of status as the global reserve currency – and has been doing so by escalating debt, increasing inflation (which is now official Fed policy), declining domestic savings rates, and rising deficit.
There have been discussions for several years about replacing the dollar with a variety of currencies including the “Amero” for the North American Union to correspond to the “euro” in the European Union and the International Monetary Fund’s “Special Drawing Rights” (SDRs) – a basket of leading world currencies.
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