Currency Wars IV

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This book explores the evolution of world reserve currency hegemony, beginning with the U.S. dollar's strategic overthrow of the pound sterling. It details how U.S. monetary policy gradually diminished the pound's power, undermining its status as an international reserve currency and trade settlement medium. The pound's attempts to counteract this dominance through the "imperial preference system" momentarily returned the dollar to a more isolated position. The intense rivalry between the two currencies created a financial power vacuum in the 1930s, worsening the Great Depression globally. The Second World War presented a pivotal opportunity for the dollar to supplant the pound, with the Atlantic Charter and the Lend-Lease Act serving as instruments in Roosevelt's strategy to dismantle British monetary influence. Ultimately, the United States established a "Bretton Woods dynasty," creating a dollar-centric system that effectively held gold as leverage over its allies. The dynamics of the "China-America" economic relationship are shifting, as America's previous tolerance for China's growth, based on a model of production and consumption, is fracturing. China's impending economic transformation will necessitate a focus on domestic markets, reducing its reliance on exports to the U.S. and altering the foundational U.S. stance of accommodating China's economic ascent.