The Shrinking US Dollar
The U.S. Dollar has been the flat currency of the world since President Nixon took the U.S. off the gold standard in 1971. Fiat currencies are not backed by any physical assets such as gold and silver but instead derive their value from the credit of the issuing government and its promise to pay. Thus, paper currencies are often vulnerable to global market instability, political uncertainty, frivolous government spending, and, most recently, irresponsible money supply increases through various central bank policies, including quantitative easing and government bailouts.
With a loss of 98% of its purchasing power over the past 110 years, a large-scale move away from the Dollar has already begun. Countries are now seeking to transact major commodity purchases, such as for crude oil, outside of the traditional dollar path. These nations are now looking to use alternative currencies, such as the Chinese Yuan, or even commodities like gold to buy their crude oil. A shift away from the Dollar will have significant implications for currency users and the U.S. Government.