Dollar crisis and the coming collapse of US global hegemony
By Colin Todhunter
The US is bankrupt. Yet Uncle Sam continues to stride the world stage and can simply print more money to get by because the dollar is the world’s reserve currency. Remove it as the reserve currency, and the US will no longer be able to remain supreme or fund its wars by relying on what would then be a worthless paper currency. Today, more than 60 percent of all foreign currency reserves in the world are in US dollars, and the US will attempt to prevent countries moving off the dollar by any means possible.
When the US moved off the gold standard in the early 1970s, the dollar more or less became a de facto oil-backed currency. In return for protection and the purchase of US treasury bonds, among other things, oil-producing Arab states agreed to conduct their oil transactions in the US dollar. The dollar may no longer have been backed by gold, but its worth was guaranteed by the strength of the US economy and the fact that it was closely tied to another precious commodity, this time oil.