Post
Topic
Board Economics
Re: currency peg (ala Saudi riyal)
by
Bazil
on 02/06/2011, 03:55:13 UTC
Does this work because of the dependance on their oil?

See: WWII

I think you meant "See Petrodollar".

WWII saw the opening of the Bretton Woods era in the world economy.  Where governments started to keep US dollars as reserve in place of gold or silver.  They trusted that the US wouldn't inflate it's currency (Hahahahha).  Richard Nixon put an end to that in the 70ies and we started to see massive inflation until the fed jumped the interest rates into the double digits.  We've been in a quasi bretton woods economy ever since, with some countries pegging to the US dollar.  Less and less as we go on because of the weakening dollar fewer countries want to peg their currencies to it.