Lead:

According to the statistics of the National Bureau of Economic Research, the United States has suffered 10 major or minor economic crises over the past 60 years. Interestingly, the United States has survived each crisis, and it has become stronger after the crisis; On the contrary, the crisis is more destructive to the strategic adversary of the United States, whose "beggar-thy-neighbor" and skillful means of transferring pressure are second to none in today's world. The depreciation of the US dollar is a common method used by the United States to transfer crises to other countries and restrain the normal development of other competitors.

When it comes to global economic issues, the depreciation of the dollar is always mentioned, because every depreciation of the dollar has a great impact on the global economy. According to the statistics of the National Bureau of Economic Research, the United States has suffered 10 major or minor economic crises over the past 60 years. Interestingly, the United States has survived each crisis, and it has become stronger after the crisis; On the contrary, the crisis is more destructive to the strategic adversary of the United States, whose "beggar-thy-neighbor" and skillful means of transferring pressure are second to none in today's world. The depreciation of the US dollar is a common method used by the United States to transfer crises to other countries and restrain the normal development of other competitors.

Why has the United States been able to pass on the crisis every time? Are other countries willing to be "fish and meat"? This has to start with the gold standard and the dollar standard.

Before the 20th century, the financial and monetary systems of the major capitalist countries successively implemented the gold and silver standard and the gold standard, and used gold for international settlements. With the dramatic growth in the size of the capitalist economy and the volume of international trade, the demand for gold as a world currency has increased dramatically. The limited and unevenly distributed production of gold, combined with wars and the imperialist looting for war and hegemony, led to a dwindling flow of gold in circulation, thus shaking the foundations of the gold standard. The great crisis of the thirties of the 20th century further shook the gold standard, and some major capitalist countries abandoned the gold standard one after another and switched to the paper money system, which eventually led to the complete collapse of the gold standard.

After the complete collapse of the gold standard, the international monetary system was in chaos, and the normal international order of goods was disrupted. The three major international currencies, the British pound, the US dollar and the franc, each form an opposing currency bloc - the British pound bloc, the dollar bloc and the franc bloc - international trade has been seriously hampered and international capital flows have almost come to a standstill. Therefore, it has become an urgent task for the international community to establish a unified international monetary system and change the turbulent situation in the international financial field.

After months of bargaining, Britain, the United States, and other countries convened the United Nations International Monetary and Financial Conference in Bretton Woods, New Hampshire, in July 1944, with the participation of 44 countries. The Conference adopted the International Monetary Fund Agreement and decided to establish an International Bank for Reconstruction and Development (i.e., the World Bank) and the International Monetary Fund, as well as a global trade organization.

On December 27, 1945, representatives of the 22 countries participating in the Bretton Woods Conference signed the Bretton Woods Agreement, formally establishing the International Monetary Fund and the World Bank. Thus began a new period in the history of the development of the international monetary system.

The Bretton Woods system established two basic principles: "the dollar is pegged to gold" and "national currencies are pegged to the dollar". It also stipulates that the exchange rate of national currencies against the United States dollar can only fluctuate within 1 per cent of the parity of the exchange rate of the United States dollar. This system established the dominance of the US dollar in the international financial and monetary system, and the US dollar eventually achieved the status of a world currency.

The establishment of the Bretton Woods system, for quite some time after the Second World War, did usher in an era of unprecedented development in international trade and the increasing interdependence of the global economy. But the Bretton Woods system has its own insurmountable shortcomings. Its fatal point is that it uses a country's currency (the US dollar) as its main reserve asset, which is inherently unstable. Because only by relying on the long-term trade deficit of the United States can the dollar be dispersed around the world and other countries can obtain the supply of dollars.

But in this way, it will inevitably affect people's confidence in the dollar and cause a dollar crisis. If the United States maintains a balance of payments, it will cut off the supply of international reserves, resulting in a shortage of international solvency. This is an insurmountable contradiction.

Beginning in the late 50s of the 20th century, as the US economic competitiveness gradually weakened, its balance of payments began to deteriorate, and a global "dollar surplus" appeared. By 1971, the gold reserves of the United States could no longer support the increasingly flooding of the dollar, and Nixon** was forced to announce in August of that year that he would abandon the "gold standard" of the US dollar at the palace price of 35 US dollars per ounce to gold, and implement the free floating of gold against the US dollar. The European Economic Community, Japan, Canada and other countries announced the implementation of floating, so that the United States finally decided to completely get rid of the constraints of gold on the dollar and implement the most thorough dollar standard.

Although the Bretton Woods system collapsed, the dollar's global hegemony remained unshaken, and the United States broke free from the ropes that bound it - the dollar was directly pegged to gold. This creates very convenient conditions for the depreciation of the dollar. Whenever a recession, short-term capital outflows, and an excessively large external debt occur at the same time, the United States takes up its superweapon -- the depreciation of the dollar.

By devaluing the dollar, the United States can significantly reduce its debt burden. Many countries with high foreign exchange reserves have large amounts of U.S. Treasury bonds, and since the vast majority of U.S. foreign debt is denominated in dollars, a depreciation of the dollar effectively means a reduction in the debt burden.

Data released by the International Federal Reserve Board at the end of 2007 showed that the dollar had lost 24 per cent of its value against the world's major currencies since it peaked in 2002.

From 1 June 2007 to 31 May 2008, the United States dollar depreciated by 10.93 per cent. Based on the external debt of up to 8.5 trillion US dollars, a 10.93% depreciation of the US dollar can reduce the debt by 1.6 trillion US dollars in one year.

The sharp depreciation of the dollar in the short term has contributed to the growth of US exports, which is also the main reason for the decline in the current account deficit.

At the same time, the depreciation of the dollar and the strengthening of the relevant currencies can also reduce the competitiveness of exports with high foreign exchange reserves and reduce deficits. It can also stimulate the rise of international oil prices, which not only strives for the maximum interests of domestic oil merchants, but also increases the cost of economic development of the BRIC countries; It can also reduce imports and curb the development of countries that rely on foreign trade to drive their economies. Kill multiple birds with one stone, count them in one fell swoop.

The depreciation of the dollar certainly has other effects. For example, if the U.S. dollar depreciates and U.S. dollar assets such as stocks and bonds also depreciate, as long as the U.S. economic fundamentals are good and the prospect of dollar asset appreciation is good, foreign capital will accelerate the inflow into the purchase of U.S. dollar assets.

The United States has used this rogue method to loot the global economy more than once, and this trick has been played many times by the United States, and it has tried and tested it again and again. Therefore, when studying economics, it is necessary to have a deep understanding of the depreciation of the dollar. Only in this way can we have a more correct grasp of the changes in the world economy.

"The dollar is our currency, but it's your problem." Nixon's Treasury Secretary Fishing Han. Connery's words profoundly reveal the essence of the dollar. The dollar has "kidnapped" the global economy and made the whole world fall into the dollar "trap", and as long as there is a problem in the US economy, people all over the world will have to pay for it.