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Don't we protect in exchange for them trading in USD?

• mikewarot 3y ago
  Initially, that was the Bretton Woods agreement. The US at the end of WWII had 2/3 of the world's gold reserves, and it was part of the system set up to help the World's economy recover. As a result of choices made by Eisenhower, and subsequent administrations, the US began to spend more than it should have, slowly making a fiction of the price of gold being fixed at $35/ounce. Eventually, after shenanigans by de Gaulle of France, Nixon was forced to close the "gold window" at which nations could convert dollars back to gold reserves. This resulted in the Nixon Shock, and eventually the prime interest rate reached 20% in April of 1980. Then Nixon made a deal Nixon made with the Saudis, the creation of the Petrodollar. The Saudis would only sell their oil for dollars, then spend those dollars in the US for goods and services, recycling them. Without the Petrodollar, it possible the dollar would have crashed to zero.
• JumpCrisscross 3y ago
  > Don't we protect in exchange for them trading in USD? No. Freedom of navigation evolved separately from Bretton Woods and dollarisation. We’ve never tied the two. And from the start, we’ve defended even our adversaries’ rights.