In 1944, as WW2 drew to a close, representatives from all the Allied countries arrived at Bretton Wood, New Hampshire, in the U.S. of A. At that Bretton Woods conference, it was agreed by the forty-four participating countries that the US$ would be used for international trade instead of Gold. The dollars would still be redeemable for Gold, but only by participating governments and central banks.
While the formalities of discussion were adhered to, the agreement was imposed upon the participants. In 1944, the US was the world’s foremost military and economic power. The US mainland was far removed from the destruction of the UK and Europe and it held two-thirds of the world’s (known) Gold.
The Bretton Woods agreement lasted until August 15th 1971. That was the infamous date that President Richard Milhouse Nixon formally reneged on the agreement. Nixon announced that the vast amount of dollars that had been borrowed into existence were no longer exchangeable for Gold. He said that it was temporary.
This year, on August 15th, it will be 50 years since the US$ default. How long will it be before the next? My opinion is that we still have at least a year or so to go. Keep enjoying those lattes and good wines.
The second US$ default, whenever it does come, will be a doozy. You may not have known about the last one, but you will know all about the next one when it happens.