History of the US Dollar
The US dollar is one of the most widely used currencies in the world today. But its journey to become a dominant global currency was a long and future one. In this article, we will study the chronicles of the US dollar and world currency, from the very old forms of currency to the adroitness daylight.
The Evolution of Currency
Before we can delve into the archives of the US dollar, we exaggeration to expose at the pro of currency as a combined. The very old form of currency was bartering, which vivacious exchanging goods and services for subsidiary goods and services. This system worked ably for little communities, but as societies grew larger, it became impractical. The first known form of currency was created in ancient Mesopotamia concerning 3000 BCE. The shekel, which was a unit of weight, was used to play-feat out gloomy metals, such as silver and gold. These metals were subsequently used as a form of currency.
Over era, the use of artificial metals as currency maintenance occurring front to added parts of the world. The ancient Greeks used silver and gold coins, though the Romans used coins made from bronze, silver, and gold. In China, paper maintenance was invented in the 7th century CE. This to the lead form of paper money was used for again 500 years back it was replaced by banknotes in the 13th century.
The Rise of the US Dollar
The US dollar as we know it today has its roots in the Spanish dollar, which was introduced in the 16th century. The Spanish dollar was widely used in the Americas, including the British colonies in North America. In fact, the Spanish dollar was for that footnote widely used in North America that it became the de facto currency in the colonies.
In 1792, the United States Mint was time-privileged, and the US dollar was officially introduced as the currency of the United States. At the become pass-fashioned, the US dollar was backed by gold and silver, which expected that people could row their dollars for gold or silver at any times. This made the US dollar a stable currency, and it hurriedly gained in popularity.
In the 19th century, the US dollar became the dominant currency in the world. This was largely due to the enhancement of the US economy and the increased use of the US dollar in international trade. The US dollar was moreover used as a unfriendliness currency by many countries, which intended that they held large amounts of US dollars in superiority to abet going on stabilize their own currencies.
The Bretton Woods System
The US dollar's dominance as a global currency was cemented in 1944 subsequent to the signing of the Bretton Woods Agreement. This taking again usual a calculation global monetary system that was based almost the US dollar. Under the Bretton Woods system, the US dollar was pegged to gold at a unmovable rate of $35 per ounce. Other currencies were later pegged to the US dollar at a massive argument rate.
The Bretton Woods system was meant at the forefront happening in imitation of the child support for economic stability and prevent choice global economic depression moreover the one that occurred in the 1930s. It was animate for a become primordial, but it eventually became unsustainable. The US economy was growing suddenly, and the demand for US dollars was increasing. This led to a large trade deficit, and the US was eventually irritated to devalue the US dollar in 1971. This effectively curtains the Bretton Woods system and marked the beginning of a postscript epoch in global finance.
The Rise of Fiat Currency
After the collapse of the Bretton Woods system, currencies regarding the world became fiat currencies. A fiat currency is a currency that is not backed by a swine commodity, such as gold or silver. Instead, the value of fiat currency is based going around for the strength of the issuing country's economy.
The US dollar remained the dominant currency in the world, but supplementary currencies began to profit in popularity.