Have you ever wondered how the change in your pocket, the shopping receipts at the supermarket, or even your lifestyle are entangled with the global economy? This may sound incredible, but it is what it is. This article will take you through the wonderful world of the global economy.
Let's go back in time, just after World War II, when Bretton Woods established a new monetary system, the dollar as we know it today. In this system, the dollar is backed by gold, and the value of the dollar is tied to the value of gold. However, in 1971, US President Richard Nixon made a decision to abolish the system. Since then, the dollar has separated from gold and become the world's most important reserve currency, and its value no longer depends on the amount of gold reserves.
Let's see how, since then, the power to issue dollars has been controlled by the private bank of the Federal Reserve. It has the right to print dollars at will without being responsible or giving an explanation to anyone. There is a famous saying, "Those who control the money supply have the power to make laws." "This may shed light on the crux of the problem we are currently facing."
While we are still marveling at the impact of the dollar, US Treasuries are snowballing due to endless currency issuance. Interestingly, this frantic currency issuance did not trigger high inflation in the United States, but instead passed most of the inflationary pressure on to countries that use the dollar for transactions.
While the U.S. economic sanctions strategy may seem harmless in the short term, the consequences may gradually become apparent. Marco Rubio, a U.S. senator, warns us that America's global influence may be declining. In order to escape the pressure of the dollar, countries have begun to explore the use of their own currencies for transactions. Brazil and China, for example, have agreed to trade in their respective currencies, which could be the prototype of a new, dollar-independent economy.
The dollar's strong position has long maintained U.S. superiority around the globe, allowing the U.S. to feed its vast military establishment and maintain near-absolute power for the past 80 years.
However, this situation may be about to change. Russia and China have already begun pushing for the BRICS alliance, which consists of five countries: Brazil, Russia, India, China and South Africa. They want a more just and equitable global order and seek to make global production more stable. Their goal is to form an international organization that shares a vision of the international trading system and multilateral cooperation.
To realize this vision, the BRICS countries are considering creating an international reserve currency based on the currencies of their member states. At the same time, China suggested that the BRICS countries should expand their size to increase their influence and representation, while also showing their open and inclusive side.
It's all about you. Your life, your consumption, is part of the global economy. We all have a role to play in it, and we are part of the global economy wherever we are. So, let's understand it more deeply, find it interesting, and lead you into its world.