How America Made The Dollar A Global Benchmark | Epic Economics
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- Опубліковано 14 січ 2023
- The Bretton Woods system cemented the US dollar as the world reserve currency. But what exactly was it and why was it abandoned?
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Things are strange right now. The US dollar is becoming less valuable because of inflation, but it's getting stronger compared to other currencies and things like gold and property. People are turning to the dollar because they think it's safer. I'm worried about my retirement savings of about $420,000 losing value because of high inflation. Where else can we keep our money?
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Great video, but the map is really confusing, because it uses modern state borders to represent the countries of 1944.
British India and South Africa were present at the Bretton Woods Conference as two of the 44 nations, but I suppose they have been omitted on this map, because they were British colonies at the time.
Russia is here used as a placeholder for the Soviet Union, but the break-away nations are not represented as members, although they were part of the Soviet Union at the time.
China is most confusing: The People's Republic of China, here depicted without Taiwan, is used as a place-holder for The Republic of China, although Taiwan is now the only remaining part of the Republic of China.
That's why the channel is called economics explained and not geography explained, or politics explained.
@@ZoranRavic you stink
Excellent broad strokes presentation. Well done.
Great video, this channel is filling an important niche.
I've been to Bretton Woods, quite a nice place for winter sports.
Just as important, Bretton Woods was also a security agreement where the US would open their markets to the world and enforce free trade between nations as the US was the only nation with a standing deep water navy. This is what allowed globalization.
The British navy had more ships than the rest of the world combined at the start of WW2, since our empire spanned every time zone and we had to keep sea lanes open across every ocean and every sea
@@StigFerrari Yet what the OP says is correct. At the end of WW2 America had the largest, and most Modern Navy in the World by a Mile. What did the UK have at the end of the War? Maybe 2 obsolete Aircraft Carriers?
@@tsubadaikhan6332 True, a masterly finess. The Feds couldnt have had a better outcome had they deliberately engineered the great powers of the day into obliterating each other, then string out the war to make sure all parties were buried in debt with their hands out to the Fed through BIS.
And leaving armies of occupation in Japan, Germany and England too ? (And later Korea)
Great little video. So much of modern economic history comes down to that one big war.
Most of the world's modern issues have origins in WW2, the Cold War, or colonialism.
@@badluck5647 So everything that happend in history has an impact on todays times?
Thank you for this very specific analysis. Much appreciate 👍
@@mam0lechinookclan607 Not everything. For example, if you were never born, then there would be zero difference on the world.
And the World has probably never seen nearly 80 years of such continuous Prosperity.
The removal from gold standard was the move toward control and destabilization.
Next do a video on the BIS.
Why was the worlds wealth trusted to one country …..that is insane
Trusted ... and then can be sanctioned.
Lol i assume that was a joke @@sootuckchoong7077
It’s interesting how many similarities there are between the Gold standard and how oil transactions take place in usd.
Oil replaced gold that's what he didn't explain. All countries need oil and almost all of the oil-producing nations will only sell in USD in exchange for protection. Hence you got something better than gold to protect the dollar status
oil isn.t peged to oil and you can buy in other currency aswell .......... this whole petro dollar thing is a myth
@@baronbrummbar8691 most of the world's oil is sold in dollars. A country needs dollars to buy it from the gulf countries (the biggest exporters of oil) this is a fact that you can easily google
@@u7nk2000 many nations simply use us dollar becouse they don.t want to trade in garbish like pesos ............
nobody forces nations to use the us dollar and more and more nations switch away from using us dollar
@@baronbrummbar8691 why not the British pound then? As I said the arab gulf which collectively controls the energy market only accepts USD. They do so in exchange for protection. This is a historical agreement made between the region founders (current kings and Sheik grandfathers ) and the US government at that time. Just search for that in google and you will find pics of the day that deal was signed.. Along with other details agreed on on that day
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watching this video from the hotel where the conference was held😎
When they made the agreement, how did they take into account inflation?
The US Fed's economic inflation goal is tailored for the rich to extract money from the middle class and poor. They get to roll over their debt and pay it off with dollars that are worth less (worthless) and the middle class and poor work longer hours basically becoming economic slaves who then suffer and eventually die. They are sucking the life out of the middle class and poor.
They didn't. That was the agreement's fundamental flaw.
if this worked as intended, there would be no inflation
the only thing that can cause inflation in the breton woods system is to add more gold ....... so inflation was very very very small
-
but then the us decided to cheat ... but you can.t cheat math and the system fell apart
They kept printing paper dollars beyond the above ground gold. In the government's quest for unbridled power they just can't help themselves. Just like we did with the Petro dollar. Except gold is actually much more finite than oil. We had a good thing going with the petro dollar until now, when for some left wing political lunacy our current administration decided to piss off opec and send the world back to the stone ages. To be more clear without cheap energy the world is f'ed.
This makes post Viet Nam era economic and military behavior make so much more sense.
I knew most of this but didn't realise why the peg failed in the late sixties.
well simply the us cheated ..... and everybody knew taht they where cheating
Excellent video but use correct map
I'm not sure if the statement made at @1:16 is really accurate. Actual gold deposits were kept at a fractional reserve. There was never a 1:1 link between the number of dollars floating around the world and the amount of gold in US vaults. (That's a common misconception about the Gold Standard) The US could freely decide what ratio of dollars it could print vs the amount of gold in reserve. And individuals and businesses weren't entitled to ask the US treasury to cash in their dollars for gold. That privilege was only extended to other nations (like France). The biggest reason for Nixon to ditch the Gold Standard was that Charles De Gaulle, the ruler of France at the time, set out to show the world that the US Gold Standard was unreliable, and began manipulating currencies in order to buy dollars at a reduced rate, then demand the US hand over the gold backing those dollars. A few more years of that would have led to no gold being left on reserve.
exactly, just as there are never enough "cash dollar notes" to cover all the deposits on register in current time...
What is the exact reasoning for foreign countries pegging their currencies to the dollar?
How did this play out for them and why was it neccesary for them to do so.
I find it hard to understand the dollar system in its intricate detail.
now the US dolllar is back by the black gold (oil)
the us dollar is not backed by oil ......... the petro dollar is just an invention by some us weirdos
Looks like the agreement was really important in its time, but it was totally unsustainable over the longer term. It helped rebuild Europe and thus the world's post-war economy, and it helped establish the USA as a center point in that economy, but the agreement as written couldn't last. It didn't take inflation into account, and didn't allow the US economy to be as versatile as it needed to be, etc. Occasionally I'll hear someone lamenting that leaving the gold standard is where the country went wrong, and everything was happy until then and misery since. I doubt that's accurate, but I've learned to not try to have that conversation; the charismatic guru that taught them this belief lives rent-free in their head and commands... religious reverence. IDK, seems sus.
The problem is that US lobbied to become the reserve currency. The initial pitch by john milton keynes was to create a new centralized currency which will not be controlled by any country but only be used for trade and remain as a alternate to Gold for reserve. The US forced that it be the $ and then once they became the reserve changed their mind. By then it was too late for others to change and they became dominant in international trade.
The standard of living has plummeted since then. Prices are growing ever higher every year. The middle class is downsizing. It doesn't matter if you save your money, it's being taxed through inflation. Forget getting interest on your money, because even the most competitive savings account interest rates only mitigate the fall in purchasing power. It's modern day slavery. So many people are modern serfs who rent land with money that is constantly losing value in return for being overworked by ever growing corporate monopolies. Just look at the charts. Ever since Nixon ended Breton Woods, productivity just skyrockets and inflation adjusted wages remain virtually the same. That's not guru talk, those are facts. We've just been living under modern day feudalism for so long that we don't even know what prosperity looks like anymore. Only the well connected and the wealthy know prosperity.
Lmaooo 😂😂😂😂 yea, the US basically pulled the rug from up under the entire world to get that top spot. The government knew it was unsustainable, which is why they initially agreed to it. Leave it up to American exceptionalism such as your thinking to see otherwise though. No, the gold standard wasn’t perfect, but not because it wasn’t far more efficient than the current “we’ll keep everything running” system in place now, but because it stifled the US government’s plan for global dominance and the maintenance of that dominance. But hey, at least that paper is backed by big tanks and nukes now.
@@luluishername thank you. Let’s tell him how productivity has grown by 60% between 1979 and 2020 while wages has grown a measly 17%.
@@luluishername I don't know where you live, but here in Australia Prosperity has not stopped growing for at least 30+ years. And India and China have lifted about 2 billion people above the Poverty Line in that same period.
Isn’t Jamaican system the most up-to-date right now?
why is that?
This video did not explain why this matters to individuals personally, as promised on the title.
and no word about the OPEC countries why they are moving out from petro-dollars.Nobody tried to explain how did it hapen
Wait, what happened to the original Economics Explained???
That's a different channel
Commenting 4 algorithm
This left me more confused than I was before. Only gave the same old battered explanation everyone hears all the time and missed the opportunity to go into depth and really explain the meaning and ramnifications of Bretton Woods and its collapse.
Bretton Woods came about because the two World Wars started due to economic uncertainty and oppression. The delegates from 44 nations who attended the conference wanted a way to avoid those conditions in the future. They focused on economics and trade.
One of the major Conference decisions was tying IMF and World Bank voting power to contributions. Those votes would decide which projects receive funding, and by how much. Nations could essentially buy voting power, which influenced global financial systems. Most participants frowned at this stipulation but they had little choice in the matter.
The US was the only booming economy at the time so, naturally, they could buy all the votes they wanted. And they did. Thus, that country gained outsized influence over global decisions. Arbitrarily abandoning the gold standard, with no notifications or discussion, is an example of such.
To this day, the US continues to exercise massive influence. For instance, urging allies to boycott unworthy nations. Like Europe buying oil from Russia or the UK abandoning the Chinese-built 5G system. All of this has its roots in Bretton Woods.
I hope this helps.
Bretton Woods system is defunct. If a country wanted to remain on gold after Nixon pulled out, they could have switched from the dollar to gold. Nothing is forcing countries to use dollars as a reserve currency and some in fact have a mix of currencies as foreign exchange reserves.
Gold is good for the people but bad for government which is why the state will never restrict itself because sound money requires discipline
@@mrashford122 Well fait money can be good for the people and the government if the government isn't full of idiots who print money (which doesn't even help the government in the _long_ run but if the government don't care what happens in 3 decades, yeah it is the interests of the people vs the government). How good gold is depends on how competent the government is. Sometimes monetary expansion is a good thing. In fact, some back-end analysis suggests that except for a period 100 years after the black death, from the high middle ages to early modern era, Europe was capital short and could have increased their (agriculturally based) economies with monetary expansion. Gold prevents disasters like Hungary, Zimbabwe, and Venezuela. But ultimately this is irrelevant to the video, since the entire Breton Woods system was defunct for awhile, so no matter how good or bad gold is, BW is no longer relevant.
@@alex_zetsu BW may be defunct, but the principles of it are not. And abandoning those principles was the coup de gras.
U.S Dollars The planet Global Market Innovation
What happened in 1971?
Deja Vu
fifty-third comment for the algorithm
Kradnut a streliať
That's all true but now it Time to abandon it
My country got independent.
Also thanks god my country didn’t have oil
🙂🧏🙇🙏🙏🙏🙇🧏🙂
When the British knew that they are being robb .. and lost their hegemony.. 😂...
First comment 😅
So it didn't so much breakdown as it was ruined by the US.
exactly it was a perfect system the us ruined by cheating ....... but you can.t cheat math
US FED: (copy and paste from my files):
Economic Inflation:
Lessons learned: US FED:
The US Fed has a goal, I repeat 'goal', of 2% annual inflation. And this is on top of all the 2%'s that came before it, which turns out to be an exponential amount of inflation over time.
Most people do not have wages and benefits that keep up with the true cost of inflation, which causes many social and economic problems in this nation and in this world. Zero income is sill zero income and zero pay raises are still zero pay raises. This is also a NATIONAL SECURITY item as many nations in the world stop utilizing America's currency as a reserve currency due to in part America's currency being weaker in this world. America has less influence in this world, which allows other nations in this world to take the lead.
Higher inflation:
* Obviously higher prices.
* Also at times lower quantity.
* Also at times lower quality.
(And if not lower quantity and/or lower quality, then that much more higher prices).
Many rich people and large corporations have taken America's wealth and hid it in out of country bank accounts and/or invested that wealth in other nations for various reasons. This has the net effect of basically stealing America's wealth from America.
Now also, rich people and certain businesses operate on huge debt, and even the US Government operates on huge debt. These entities love higher inflation because it helps to wipe out their debt, as they pay back their debt with currency that is worth less (worthless). Additionally, things like saving's account's get next to nothing for 'normal' people trying to save money for future expenses. Those that are operating on debt get rewarded and those trying to be more financially responsible are getting punished.
America's currency system is broken and needs to be fixed.
In part, a law needs to be passed that the US Fed has to have a 'goal' of 0% (zero percent) inflation. Sure, this is going to piss off those who game the financial system, but it would help with curing some of societies' issues as well as strengthening US currency thereby strengthening America's position in this world as more nations would want to utilize the US Dollar as a reserve currency. Inflation is still going to occur due to various reasons, but we don't have to automatically have a goal of increasing inflation.
Another idea might be to give the US Fed just 1 single job: Control Inflation, (and take away their other job of trying to have full employment). Let the markets control full employment.
And for any entity that thinks economic inflation is a 'good' thing, then you must also be okay with many of life's social and economic issues as well as a nation becoming weaker in this world as it's currency eventually loses value in this world. You must be okay with poor people suffering and dying due to higher economic inflation. In part, at least some of this world's suffering and death is on you. You caused this with your higher economic inflation goals. (A man made problem and can have a man made fix with 1 simple change. Change the US Fed's economic inflation goal from 2% to 0% which would help ease suffering and death in this world.)
And if you still say that 2% inflation would be fine, then surely you would not have a problem with making a Federal law that says that all businesses all across America are mandated to increase their employee's salaries by at least 2% every year, (the 2% just keeping up with inflation, any above 2% due to the increased value of that employee).
Otherwise, it's a system set up by the rich to transfer wealth from the middle class and poor to the rich. And if the middle class and poor do not stand up for their own interests against the rich, who will?
You are delusional. Average american has immense wealth and opportunity, especially because us government can weaponize its currency. Even in covid it printed 3x its currency supply and distributed amongst its citizens yet not causing hyperinflation because USD being reserve currency is bought by other countries thus exporting the inflation to other countries. While on the same hand increased the interest rates after little inflation caused by 4x dollar supply. Now people and institutions now not only have more dollar its purchasing power increased. Now people and institutions can use this increased supply to buy resources and assets all over the world and then start reducing interest rates again to stimulate growth in USA economy. This is how usa stays ahead and other countries go bankrupt without their own fault as they need to use usd to import any commodity in the world.
@@rho992 I am delusional, You are the one who are delusional. Do the math. The US Fed has a 'goal' of raising the annual inflation rate by 2%, which is often above 2%, and is 2% on top of all the 2%'s that came before it, which turns out to be an exponential amount of inflation over time. Do most people's wages go up by at least 2% EVERY year? Heck no. This is why in part many people have to work longer hours and/or 2 or more jobs just to get by in this life.
But when you say, "... especially because us government can weaponize its currency.", of which is also why more and more nations are moving away from the US Dollar as a reserve currency. Money is not just being utilized as one half of a trade equation, it's being utilized as a weapon.
And when you say, "Now people and institutions now not only have more dollar its purchasing power increased.", you show you are clearly delusional and are not dealing with real reality.
As far as the USA going bankrupt or not, they sure seem to be heading that way with their ever increasing national debt. It used to be very low just a hundred years or so ago, now it's over trillions in debt.
The US Fed at present is certainly not putting effort into maintaining full employment; I certainly wouldn't trust the same 'free market' that encourages capital flight to take care of it
@@lukeedwards7677 Why also the US Fed should only have 1 single mandate: Control inflation. Let the markets control employment. A business would most probably only hire those employees that it needs, (until robotic AI's take all the jobs, including CEO's, etc.)
@@charlesbrightman4237 A quick look at our Reserve Bank in Australia's current situation should be all the data you need on why detaching inflation control from the health of the rest of the economy, such as promoting low unemployment and better wage growth, isn't a great idea - all due respect, but all that the free market is genuinely 'efficient' at is in how to get capital to draw in more capital from the rest of the economy and how best to evade regulation and taxation when less pliable governments see the full picture of what's really going on
Economics Explained: I think a found a problem with the USA's currency system (one of many):
On the USA's currency it says, "In God We Trust". The thing is though is that God does not actually exist except for as a concept alone. So who are the money dealers truly trusting in?
@Josh Turner best response possible to this comment
@Josh Turner Human imagination. Here are two analysis concerning 'God':
GOD DOES NOT ACTUALLY EXIST EXCEPT FOR AS A CONCEPT: (copy and paste from my files):
For those who claim God actually exists (besides as a concept), consider the following:
a. An actual eternally existent absolute somethingness truly existing.
b. An actual eternally existent absolute somethingness that has consciousness, memories and thoughts truly existing.
People who claim God actually and eternally exists basically are claiming that 'b' above is correct but yet simultaneously seem to be saying that 'a' is impossible to occur.
'a' above can exist without 'b' existing but 'b' cannot exist unless 'a' exists. Even per the scientific principal of Occam's razor, 'a' is more probable of being really true rather than 'b'.
I am one step away from proving God's existence, but am unable to find any actual evidence to do so. And nobody I've talked to seems to have any actual evidence of God's actual existence either. All humans appear to have are 'Theories of God'. Some humans appear to go their whole life basing their life upon their specific theory of God. Many give their God human characteristics and cannot even prove the existence of their God much less the characteristics given to their God. Some have circumstantial arguments for a God's existence, but others have circumstantial arguments for no God existing. Not one has any actual factual evidence that their God actually factually even exists. Hence, at this time in the analysis, God does not actually exist except for as a concept created by humans for humans. Humans have personified Nature and called that personification "God". Instead of what is claimed "God creating man in God's image", it's more likely that "Man created God in Man's image".
Further consider that if the emotional parts of the brain override the logic and reasoning parts of the brain, people can be made to believe basically anything at all as being really true. Plus modern science has already proven that humans can have visual and audio hallucinations that are very real to that individual. All the more reason for critical thinking being needed and to follow the facts wherever those facts might lead. Some people for some reason (social conditioning/brainwashing/wishful thinking) believe in future eternity without end but do not accept eternity past with no beginning.
In addition, while modern science does not know what consciousness actually is yet, memories and thoughts appear to require a physical correctly functioning brain to have those items occur. Where is God's brain? Where are God's memories stored at? How are God's memories stored and retrieved? How does God think even a single coherent thought?
If inside of this space time dimension we appear are existing in, then where?
If outside of this space time dimension we appear are existing in, then where is the interface between that dimension and this dimension? No such interface has been discovered as of yet as far as I am currently aware of.
* Note: Since this is a search for the real absolute truth concerning God, Intelligent Designer, Pre-existent Consciousness, etc, feel free to copy and paste this elsewhere to further the analysis and discussion.
* For those who claim God actually exists besides just as a concept, please prove that 'b' above is really true and that 'a' is not really true.
Additionally:
a. Modern science claims energy cannot be created nor destroyed, hence energy is eternally existent.
b. An absolute somethingness cannot come from an absolute nothingness, so an absolute somethingness always existed, most probably being energy itself.
c. Universe ALWAYS existed in some form and NEVER had a beginning, No Creator Needed.
'a' is true, is it not? 'b' is true, is it not? If 'a' and 'b' are true, then no creator is needed in 'c'.
* Some people for some reason (social conditioning/brainwashing/wishful thinking) believe in future eternity without end but do not accept eternity past with no beginning.
@@charlesbrightman4237 wich God do American believe in ? that’s easy to answer. Think of god as the thing you assign most value , so when they say “ in God we trust” , they’re saying In money ( dollars) they trust . Money being the thing they assign most value.
@@nathanolson3135 So it would seem. But it also appears there are some apparent deluded individuals who still believe in a magical sky daddy, that Jesus is still alive somewhere, Jesus is going to come back to this Earth to save them all one day, and that they will live throughout all of literally future eternity,
Scam
You talked in circles without talking in circles. Great video relatively. Do better
Bretton Woods: The birthplace of many conspiracy theories
Second comment 😇
We gave our word to the world, but we don't have to keep our word, so we'll just live as parasites off the backs of the world's hard work. It's all coming to an end soon and it's way overdue.
And then people say USD is overpowered when they can simply exchange usd for other more valuable currencies.
Oh wait
US is the most stable/democratic/diverse (people and investment wise) country in the world.
Regardless of gold reserves.
Conspiracy theorists are a laughing stock.
funny that non of theses 3 are true .......... (US is the most stable/democratic/diverse)
@@baronbrummbar8691
I can't joke about assassinating my president, US residents can
US truckers can protest the lockdown without risk of having their bank account frozen (unlike their neighbor)
the riots US experienced is civil/culture riots
unlike Iran/Russia/China's institutional riots
US main products are google/YT/Netflix/Facebook. which most of the modern world uses for day to day life.
US no longer relies on middle eastern oil after being efficient/having reserves in (alaska/texas? forgot which one, but they discovered/extracted oil since 2014 and it's a huge panic to UAE geo-politically cuz they basically no longer have a leverage against the US long-term)
I don’t like this voice I like the original one