Expanding The Influence
Have you heard about the expanding influence of the BRICS Alliance countries and their strategy to overtake the US economy and the dollar?
Why should we be concerned with any of this? That involves a short Cliff’s Notes history lesson. Here goes. . .
What Happened To The British Pound?
For well over a hundred years the reserve currency of the world was the British pound sterling. They were the biggest and baddest economic force in the world. Their empire was so widespread that ‘the sun never set on the British Empire.’ Their money was accepted everywhere. What happened to the pound? It started to erode around the time of World War I. The United States surpassed Great Britain as the world’s leading economic power and the Dollar became the world’s reserve currency during the 20th century near the end of World War II. The process was gradual and marked by a series of key events and historical circumstances.
During World War I our country became the dominant economic force in the world. The USA provided financial support to the Allied Powers during the war. Britain’s economy was severely weakened by the cost of war and the damage that was done to the UK’s trade structure. The US economy grew stronger as we increased industrial production and international trade.
A Weakened British Economy
The treaty that ended World War I, (The Treaty of Versailles in 1919) laid heavy reparations on Germany. Those war reparations were very hard for the Germans to pay. Germany was a big time trading partner of the UK. This debt laid on Germany further weakened the British economy.
The Great Depression of the 1930s profoundly affected Britain’s economy. Even though the economic downturn affected the United States and other countries, we all were able to recover more quickly than Britain and the rest of Europe.
The Last Straw
The United States provided significant financial and military support to the Allied Powers during World War II. This further weakened Britain’s position as a global economic power. We were becoming the top dog.
The Bretton Woods Conference in 1944 established a new international monetary system, with the US dollar as the primary reserve currency. This system was based on the gold standard, with the US dollar pegged to gold at a fixed rate. That was the last straw for the British. The Pound Sterling no longer reigned supreme. The British economy has never recovered. It has become a second tier economy and country. Some say we pulled the rug out from under them.
We further solidified our position as the number one economy right after World War II with the implementation of The Marshall Plan. The Russian Commies tried to cut off the allied half of Berlin from food, medicines and fuel. We did an end run around them with the largest air lift of supplies and materials that the world has ever seen. We singlehandedly supplied all the western allies and kept West Berlin out of the hands of the commies. The Berlin Air Lift is one of the seven wonders of the modern world.
The Dollar Becomes The World’s Reserve Currency
We provided the financial aid that rebuilt all of Western Europe after World War II. This further solidified our position as the world’s leading economic power. This ensured our Dollar would continue to be the world’s reserve currency for decades to come in spite of the BRICS Alliance efforts.
