Currency

Bretton Wood was the monetary system before 1971. It mark the important milestone of paper currency for the first time, made international. The currency was U.S dollar. After WWII, most country was struggled to rebuild their situation. United State industry is the least affected by the man made disaster. The rest of the world were required to import products from United State, for many could not be produces locally due to war aftermath. Taking a step further, United State introduce bretton wood to replace gold standard which was practiced for international trade. It was promoted to be a much more convenient way to trade. United State also promise for every 35 U.S dollar is exchangeable an once of gold to strengthen the confident of the system.  Furthermore, the rest of the world during that time, was running out of gold reserves. Most of them were consumed and traded for military supplies during WWII. It was the direct relief for the rest of the world, given the situation they had during the time.

Vietnam war raged. Excessive U.S dollar was printed. The world begin to question the trust worthiness of the currency. Frenzy panic set in, where countries begin to trade most of currency reserve with gold. Noting the situation could be irreversible, President Nixon took a audacious step to abolish Bretten Wood to secure national interest. Fiat currency was introduced. Currency was no longer peg with gold. It become a debt instrument. It is a government backed set, guarantee by the political, military and economy stability of the country. In a simplified way, the trustworthiness of United State tax payer.

The fiat currency system is a leverage instrument to enable people to borrow future resources for today immediate gain. It like a catalyst that accelerate the chemical reaction of economy. It make most of the average people a channel to access to many luxury like houses, cars and expensive vacation. It made rich get richer quicker. It make country (United State) to strip off anything in the world for her own interest quicker, faster and efficient, with penny of cost. It is a house of card that required continuous feeding of debt. It is a two edge sword which on the other side a international ponzi scheme.

Fiat currency was since then adopted internationally. 169 countries in the world share a common currency as international reserves for international trade. It means if Japanese company would like to sell cars to other country, by technical point of view, the other country is required to exchange the country currency to U.S Dollar and buy the Japanese Car. The Japanese company, then can choose to keep the U.S Dollar for reserve, or buying products from other country or buying U.S dollar dominated Assets. But, somehow, the Japanese company is required to exchange some portion of its profit into Japanese yen, to pay expenses in japan, where the car is produces. The flow of exchange  is the mechanism how each currency supply and demand will affect a country exchange rate.

The fiat currency has grown to state where no turning back is possible. The problem has begin to become more obvious. The immediate repercussion is raising commodities price and excessive inflation. Those however do not hurt everyone, at least for those who are rich and who know how to choose a side. Unfortunately, there are only approximately 10% of today world population are aware of such situation. In order to secure our future, we need to readjust our perception of currency, to avoid falling into the international currency storm, which might happen anytime soon.