Why is the dollar used as the main payment system in the world?
This question appeared in my mind after reading the 2015 Special Report, section Power through Neglect. This part of the article featured examples of America using its hold over the dollar to push its political and economic agendas while neglecting such respected international institution as the International Monetary Fund and the World Bank – entities that were created to maintain the stability of the global economy (“The Sticky Superpower”).
What puzzles me is why the world is so compliant with using the world’s first currency that does not have any gold or silver backing. Since 1938, the US dollar stopped being redeemable in gold, and in 1968 – in silver. In other words, it is no longer a currency that is redeemable for lawful money in any American federal bank. It is simply a legal tender for “all debts, public and private.”
To summarize, the American dollar has as much value in gold as tissue paper, can be printed in any amounts by the Federal Bank, and is used as a political tool whenever the American government decides so. Which begets the question of why is the world’s economy using the dollar as the main payment system when it is only supported by the “full faith and credit” of the American government.
Works Cited
“The Sticky Superpower.”The Economist. 2015, Web.