The U.S Dollar has a very interesting and storied history among the great currencies of the world.
It is currently considered the de-facto Reserve Currency which means essentially (and arguably) that is the most important currency in play in the world right now at this point in history.
It was not always the world’s reserve currency, in fact, it was not until the historic meeting at Bretton Woods in 1944 that is was decided that the value of all other world currencies would be pegged on its relationship to the value of the dollar. In other words, the dollar would be the currency to set the benchmark, and all other currencies value would be determined in comparison to it.
A Big Change
A big change in the way the dollar was valued occurred in the 1970’s when the dollar was taken off the Gold Standard.
Up until that point, all paper money issued in the US was backed by the amount of Gold the US Government held in its vaults. Essentially you could take your dollars to the US Treasury and demand the same value in physical gold bullion.
By removing this standard the currency became known as a “flat” currency, which means it is not backed by any physical commodity.
The US dollar is the currency that the vast majority of the world trades its items in, which helps to prop up its value.
There are other countries who believe it is time for other currencies to become less connected to the US dollar for a variety of reasons.
In particular, China and Russia have both expressed an interest in a competing currency that is not tied in any way to the dollar or to American interests, which could have a dramatic effect on the dollar’s value if the idea ever came to fruition.