ECONOMIC RESET 2018
There is more than one meaning that is attached to the phrase global economic reset. A standard definition would be a return to a global currency system that all nations would agree upon. The last time nations gathered together to agree upon a new global currency system was in Bretton Woods, New Hampshire. While World War II was still going on leaders from nations around the world decided on a new global currency system. This led to the formation of global organizations like the International Monetary Fund and GATT, which later became the World Trade Organization.
The world’s allied nations agreed on a fixed currency rate which was sort of based on a global gold standard. The U.S. dollar was the currency that nations used to back their currency under this agreement. The reason for this was because the United States was in possession of most of the world’s gold supply at this time.
America benefited greatly from this new currency system and the dollar made its way into central banks around the world. In time we left the fixed rate system. Richard Nixon stopped backing U.S. dollars with gold globally in 1971. This was known as the Nixon Shock. Today all the major currencies float on a global market. While some things have changed we are still on the remnants of the Bretton Woods System. Many Central Banks still have the dollar in their reserves and it remains in high demand today.