At the end of the 19th century London was the capital of a global superpower. Through aggressive colonization the British Empire then controlled more geography than any previous world power. By the end of World War II, however, Britain’s excesses had plunged the country into economic devastation.
In July, 1944, a world economic summit was held at Bretton Woods, New Hampshire. This groundbreaking international gathering included 730 delegates from over 40 Allied nations. Established at this conference were the World Bank, the International Monetary Fund, and the General Agreement on Trades and Tariffs, later known as the World Trade Organization. The United States linked its dollar to gold at $35 per ounce and all other currencies then linked to the U.S. dollar. This gave America and the U.S. dollar global economic supremacy, all backed by gold.
Then along came the Vietnam War of the 1960s and 1970s, placing a severe strain on America’s economy. Inflation grew, the country faced its first trade deficit in the 20th century and other nations lost faith in America’s ability to maintain its economic strength. In 1971 President Richard M. Nixon officially detached the U.S. dollar from the gold standard established in 1944. Ours became a fiat currency based on faith in the system and faith in the federal government.
Recognizing the potential decline of the U.S. dollar no longer backed by anything except faith in America, Washington moved quickly to ensure a global demand for our currency. The federal government obtained agreement from the Oil Producing and Exporting Countries (OPEC) that oil would be priced exclusively in U.S. dollars, regardless of whether it was sold to European, African, Asian, South or North American countries. The “petrodollar” system bolstered faith in the paper-only fiat currency.
Today the mighty U.S. dollar is still the world’s reserve currency, but its days are numbered. I firmly believe that we will witness the downfall of the U.S. dollar system within the next decade. There are several reasons why the dollar must collapse, and 3 specific threats to our endangered U.S. currency:
- Excessive printing of money
- The lack of a strong dollar policy
- A growing aversion by foreign nations to hold U.S. dollars
Today America’s deficits are hitting all-time highs, the credit crisis worsens daily, and the money supply expands at a record pace, triggering fears of widespread inflation. Clearly, a financial day of reckoning awaits this country and its arrival will become a rude awakening to all who are not prepared. Unfortunately, the U.S. government is doing little to prevent this impending dollar collapse.
Seeing what lies ahead should make Christians glad our true investments are safe in Heaven where “neither moth nor rust destroys and where thieves do not break in and steal.” (Matthew 6:20)
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