The Power of the US Dollar: Will it Ever End?

Running head: HUMAN RESOURCE DEVELOPMENT
Human Resource Development
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Author Note

1HUMAN RESOURCE DEVELOPMENT
INTRODUCTION:
The dollar is the first currency in the world and is the most coveted and the leading
currency in the world today. However, many people feel that the position governed by the dollar
is ending. Despite the waning confidence of people with regard to the value of a dollar, the US
dollar occupies pride of place and is widely used by government institutions, corporations,
financial institutions and the general public. The international role of dollars gives the United
States of America a series of benefits that include seignorage, prestige, policy autonomy,
flexibility in terms of balance of payments as well as exchange rate which includes capital.
DISCUSSION:
If the value of dollars go down, or is truly threatened, the government of the United
States of America as well as its citizens must give up a crucial resource of wealth, independence
and convenience. Without the dollar, the American government will have a tough time sourcing
currency from other countries, and that will worsen the economic, and geo political decline of
America. For the pessimists, a major reduction in the international role of the dollar international
is not merely a prospect but an impending reality. With the rise in the popularity of the Euro, and
the rise of China, people are speculating that the time for a multipolar currency order has come.
The cost of war and financial crisis has led to the belief that we are witnessing the last era of the
American dollar. Economic size of the financial and commercial markets has an influence on the
status of the currency of a country and so does political factors. According to economists the
importance of dollar can be attributed to the fact that everybody is using this currency. Dollar
supremacy is a result of America’s bargaining power, socializing power and structural power.

2HUMAN RESOURCE DEVELOPMENT
American hegemony is persistent and the function of the dollar in relation to the four
important things, i.e. security, production, knowledge and finance. The combination of
America’s financial power, the power of its trade markets as well as power that is there in its
military, in the way of ammunition and troops, is the reason why the dollar garners such an
important position. The constant pushiness of dollar hegemony is due to the financial capability
of the United States of America. In 1971, the United States of America told Saudi Arabia and
other states present in the Gulf to state the price of oil in dollars, and not to consider any other
notes of any other country in exchange (Shin). In return, the United States of America assured
Saudi Arabia safety and security benefits in the form of military presence by America.
The dollar is a global currency and is considered to be the new gold standard. The US
dollar is backed by the American economy which is one of the strongest in the world. The dollar
is accepted across the world. After the conclusion of the Second World War, the countries that
are developed in the world made a plan in Bretton Woods, New Hampshire (Shin). The rate of
exchange for all foreign currencies of the world to the US dollar was fixed. According to the
Bretton Woods agreement, the United States of America stated that they would redeem any
dollar for its value in gold. However, in the 1970’s all countries began to demand gold in order to
combat inflation. In order to prevent Fort Knox from depleting all its gold reserves, the then
President of America, Richard Nixon separated the dollar from gold. By then the dollar had
become immensely popular as a currency around the world.
The majority of the contracts with the world, especially the oil contracts are denominated
by dollars. The Chinese economy, the Malaysian economy, the Singapore economy and the
Hong Kong economy peg their currency to the US dollar (Shin).