The role of the US dollar in the global economy can hardly be overestimated. The US currency is used for most of the international transactions, it is the guarantor of the well-being of millions of people around the world. Much of the dollar's success is due to its ability to respond to various political and economic events.
A brief history of the dollar
The first dollar was printed back in 1798. The first dollars were minted by independent banks from gold. In those days, the exchange rate was rigidly tied to the "gold standard".
During the world wars, the United States suffered from destruction less than the countries of Europe and Asia. The United States became the world's financial center, and the US dollar became the dominant global currency, tied to gold.
The 1979 Kingston Conference in Jamaica ended the dominance of the green currency in the world. The dollar has lost its peg to gold, and with it its inviolability. Nevertheless, the dollar remained the key global currency.
Currency parity
The actual dollar exchange rate is affected by the cost of goods valued in USD. This estimate is called "currency parity". The dollar is indirectly tied to highly liquid goods: oil, gold, grain, milk, cotton. Their value, in turn, is estimated by stock exchange brokers.
U. S. government debt
The rise in US government debt threatens the global economic system. The dollar exchange rate largely depends on the fragility of the American economy. The aggressive military policy of some American presidents (Reagan, Clinton, Bush Jr.) has led to the largest debt in world history: the United States owes its creditors more than $ 17 trillion.
Analysts recommend monitoring the value of the US government debt not only to the owners of the American currency, but also to those who have other assets (stocks, foreign currency deposits). It is believed that the United States is on the brink of default: in the near future, the US government may stop paying interest on its bonds, which will instantly turn the dollar into a green paper.
Stock market
Because of its international status, the dollar does not directly depend on the stock price of specific companies. However, the modern financial system is a "ball of threads": the fall of one system-forming corporation can lead to an avalanche of bankruptcies, and, as a consequence, a fall in the dollar exchange rate.
The collapse of the mortgage broker Fannie Mae in 2008 was indicative: loans for expensive houses were given at low interest rates to people unable to bear the burden of debt. At first, such debts were in value, nothing foreshadowed an economic crisis. But the loans were not repaid, the bubble inflated, and the natural collapse of Fannie Mae led to the fall of three large banks and the dollar depreciation by 2.5% over the week.
