What Is the American Dollar Backed by?
Gary A. Wilson
April 8, 2007
What is the American dollar backed by? In the twentieth century the American dollar has gone through several phases. The first phase of the American dollar is the creation of the Federal Reserve Bank. The next phase was the worldwide strengths that the dollar gained because of the accords reached at The Bretton Woods Conference of 1944. The closing of the gold window by President Richard M. Nixon in 1971 was another important phase of the U.S. dollar. Finally, enters the current state of the U.S. dollar, the Petrodollar (dollar backed by oil sales). These are by no means the only changes that the American dollar has gone through in the twentieth century, but they are crucial to understanding where the American dollar currently stands in world finance. Even today these phases and the direct way in which they influence foreign policy and world events are relatively unknown by the American public, because of this lack of historical knowledge it is very difficult for the populace to realize that the reasons given for world events might not be valid.
The first phase of the American dollar in the twentieth century is the creation of the Federal Reserve Banking System. On December 23, 1913 the Federal Reserve Act, also known as the Glass-Owen Bill was passed through Congress. The Republican controlled Congress rushed this bill through while many of the members of the Congress were at home for the Christmas holiday. President Thomas Woodrow Wilson then signed this bill into law within one hour of being passed by Congress. The Federal Reserve System is an independent central bank comprised of twelve privately owned district banks. Although the President of the United States appoints the chairman of the Federal Reserve Bank (the Fed), and this appointment is approved by the United States Senate, the decisions of the Fed do not have to be ratified by the President, or anyone else in the Federal Government. One of the primary
April 8, 2007
What is the American dollar backed by? In the twentieth century the American dollar has gone through several phases. The first phase of the American dollar is the creation of the Federal Reserve Bank. The next phase was the worldwide strengths that the dollar gained because of the accords reached at The Bretton Woods Conference of 1944. The closing of the gold window by President Richard M. Nixon in 1971 was another important phase of the U.S. dollar. Finally, enters the current state of the U.S. dollar, the Petrodollar (dollar backed by oil sales). These are by no means the only changes that the American dollar has gone through in the twentieth century, but they are crucial to understanding where the American dollar currently stands in world finance. Even today these phases and the direct way in which they influence foreign policy and world events are relatively unknown by the American public, because of this lack of historical knowledge it is very difficult for the populace to realize that the reasons given for world events might not be valid.
The first phase of the American dollar in the twentieth century is the creation of the Federal Reserve Banking System. On December 23, 1913 the Federal Reserve Act, also known as the Glass-Owen Bill was passed through Congress. The Republican controlled Congress rushed this bill through while many of the members of the Congress were at home for the Christmas holiday. President Thomas Woodrow Wilson then signed this bill into law within one hour of being passed by Congress. The Federal Reserve System is an independent central bank comprised of twelve privately owned district banks. Although the President of the United States appoints the chairman of the Federal Reserve Bank (the Fed), and this appointment is approved by the United States Senate, the decisions of the Fed do not have to be ratified by the President, or anyone else in the Federal Government. One of the primary
Cited: Holden, David, and Richard Johns. The House of Saud: The Rise and Rule of the Most Powerful Dynasty in the Arab World. New York: Holt Rinehart and Winston, 1981. Lippman, Thomas W. Inside the Mirage: America’s Fragile Partnership with Saudi Arabia. Boulder, CO: Westview Press, 2004 Middle East Information Center. War in Iraq, ‘Petro-Dollar’ and the Challenge by Euro 30 April, 2004 <http:middleeastinfo.org/article4398.html. Paul, Honorable Ron of Texas. The End of Dollar Hegemony. Before the U.S. House of Representatives, 15 Feb. 2006. The United States Constitution. Article I Section 7.