The devalued Dollar, as global reserve currency, had the same effect on global inflation as the reduction in the value of gold, as the money commodity, and measure of value, in previous centuries, resulting from new gold discoveries. The US was able to pay its way, not, now, because of its administratively fixed rate against gold, but because of its role as global reserve currency, and because of those other inflows. In the 1970's, the rise in the price of gold, partly, reflected this devaluation of currencies, but, also, partly, reflected its role as store of value, and speculative asset. But, after 1980, when the peak for gold was reached, it could no longer perform that latter function. Over the next 20 years, its market price fell back to around $250 an ounce.
There is only a point in buying speculative assets, like gold, if they produce capital gains, or at least, preserve their own value. Its why such assets as Bitcoin, which, unlike gold, have no use-value, and so, also, are not commodities possessing value, are subject to such wild swings in their market price. After 1980, a falling gold price signified capital losses. As I set out, elsewhere, the market price of gold is largely determined by the role of the existing supplies of it in existence. As the owners of those existing supplies sought to sell it, its market price fell even below its long-run cost of production, witnessed by the fact that, as the new long-wave uptrend began, in 1999, its price rose quickly from $250 an ounce, despite central banks continuing to sell from their own gold reserves. By 2011, it had risen to over $1900 an ounce. In the following years, it fell back to around $1200 an ounce, but with currencies again being devalued, as a result of large scale printing of money tokens, during lockdowns, and now, with Trump turning the US into a rogue state, and trashing the safe haven status of US financial and property assets, gold has risen again to, now, stand at over $3,000 an ounce.
In the meantime, the use of Dollars to buy US financial and property assets offered not only capital gains, but also a yield on those assets, in the form of interest/dividends or rent. The most obvious result of that was in the form of Petrodollars. The Gulf states, following the oil crises of the 1970's, and formation of OPEC, became the recipients of huge flows of Dollars in payment for oil. Unable to use all those Dollars in their own economies, the Gulf states ploughed them straight back into the purchase of US bonds, shares, and property.
The demand for Dollars, across the globe, to pay for oil, raised the value of the Dollar, and the return flow of those Dollars, to the US, kept its value high against other countries. The mechanism by which, under a floating currency system, trade imbalances should result in a fall in the exchange-rate, making its exports cheaper, and imports more expensive, could not operate for the Dollar, in these conditions.
But, contrary to the argument presented by Trump, this was not some conspiracy by other countries to systematically rip off the US. It was, in fact, a continuation, by other means, of the way, under the Gold Standard, the US could pay for its imports with increasingly worthless Dollars, whose value was artificially fixed. What is happening, now, is a repetition of what happened in the 1980's, when that process led to the rapid development of Japanese imperialism, and its industrial dominance, manifest in its trade surplus with the US, whilst the value of the Yen did not rise, correspondingly to the Dollar. It resulted in The Plaza Accord, in 1985, and the Louvre Accord in 1987.
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