US Dollar - a Weapon and a Promise

Finished reading a book “The Wealth of Shadows” dealing with the U.S. Treasury Department during the late 30’s through the mid 40’s and the Bretton Woods agreement that established the dollar as the reserve currency for the world. As President Roosevelt worked to build the defense establishment to deal with the future WWII, the Treasury Department was undertaking the creation of the dollar currency to do a similar battle around the world to deny financial resources to our adversaries and create dollar resources out of thin air for our allies. This was the method used by German Central Banker Hjalmar Schacht to build the German War Machine in the thirties as the rest of the world was mired in a depression. He created the Reichsmark currency which was used to finance Hitler’s military rearmament program that overwhelmed Europe. The U.S. Treasury created dollars that were shipped to Britain and Russia to buy weapons made in the U.S., called the arsenal of democracy. The Treasury also shut off dollars and oil that Imperial Japan was using to establish its empire throughout Asia forcing them to gamble it all at Pearl Harbor. In 1944 at Bretton Woods, New Hampshire the rest of the world signed on to an agreement that acknowledged the dollar would supplant the British Sterling as the world’s exchange currency for all international transactions. There was an implicit understanding that the major countries of the world would never create another World War over economic issues because they would always have access to dollars. In 2007 and 2008 the U.S. Treasury through the Federal Reserve Bank lived up to that promise by creating enough dollars to prevent a worldwide depression.