Dollar Debasement

Extracted Attributes

• Consequence

  Erosion of purchasing power of the dollar

• Related Concept

  De-dollarization

• Definition (Modern)

  Reduction in the value of a currency through excessive creation of money, leading to a decrease in purchasing power.

• Primary Cause (Modern)

  Excessive money creation by central banks and governments to manage mounting debts and economic crises.

• Definition (Historical)

  Reduction in the precious metal content (e.g., gold, silver) in coins.

• Alternative Assets/Hedges

  Gold, Bitcoin, other cryptocurrencies, shares

• Historical Cause (Roman Empire)

  Dilution of silver coins with cheaper metals to fund military and economic expansion.

• Contextual Currency (Canadian Dollar)

  Fifth-most held reserve currency globally as of January 2024, valued for Canada's economic soundness, strong sovereign position, and stable legal/political systems.

Timeline

• Emperors diluted silver coins with cheaper metals to fund military and economic expansion, which eventually caused inflation, disrupted trade, and led to social unrest. (Source: web_search_results)

  Roman Empire era

• The Bretton Woods system was established, pegging the U.S. dollar to gold and setting exchange rates among major currencies, with the dollar serving as the primary reserve currency. (Source: web_search_results)

  1944

• Rising U.S. inflation, driven by fiscal spending on military engagements and domestic programs, led to foreign countries becoming increasingly unwilling to absorb the growing supply of dollars. (Source: web_search_results)

  Late 1960s

• Under mounting pressure, President Nixon suspended the dollar's convertibility into gold, effectively closing the 'gold window' and marking a devaluation of the dollar. (Source: web_search_results)

  1971

• The Smithsonian Agreement reinforced the dollar's devaluation, aiming to stabilize exchange rates after Nixon's suspension of gold convertibility. (Source: web_search_results)

  1971-12-18

• The dollar was devalued again to $42.22 per ounce of gold. (Source: web_search_results)

  1973

• The U.S. formally removed all ties between the dollar and gold, marking the end of the Bretton Woods system. (Source: web_search_results)

  1976-10

• The purchasing power of the dollar has steadily declined; for context, $1 today would have been able to purchase $18 worth of goods in 1924. (Source: web_search_results)

  1930s-present

• The Canadian dollar is the fifth-most held reserve currency globally, accounting for approximately two percent of all global reserves. (Source: wikipedia)

  2024-01

Canadian dollar

The Canadian dollar (symbol: $; code: CAD; French: dollar canadien) is the currency of Canada. It is abbreviated with the dollar sign $. There is no standard disambiguating form, but the abbreviations Can$, CA$ and C$ are frequently used for distinction from other dollar-denominated currencies (though C$ remains ambiguous with the Nicaraguan córdoba). It is divided into 100 cents (¢). Owing to the image of a common loon on its reverse, the dollar coin, and sometimes the unit of currency itself, may be referred to as the loonie by English-speaking Canadians and foreign exchange traders and analysts. Likewise, amongst French-speaking Canadians, the French word for loon, huard, is also commonly used. Accounting for approximately two per cent of all global reserves, as of January 2024 the Canadian dollar is the fifth-most held reserve currency in the world, behind the US dollar, euro, yen, and sterling. The Canadian dollar is popular with central banks because of Canada's relative economic soundness, the Canadian government's strong sovereign position, and the stability of the country's legal and political systems.

Web Search Results

• The hidden cost of monetary debasement - DPAM

  Monetary debasement has been a recurring process throughout economic history, with governments and central banks seeking ways to manage mounting debts and economic crises. In its simplest form, debasement refers to the reduction in the value of a currency, historically through lowering the precious metal content (such as gold and silver) in coins, and in modern times through excessive creation of money. While these measures have sometimes provided short-term relief, they carry hidden costs that [...] In conclusion, monetary debasement remains a complex issue, where central banks and governments must choose between continuing policies of debt monetisation – risking long-term currency debasement – or pursuing fiscal austerity, which can slow growth and cause social unrest. Whether through the rise of alternative assets such as gold and cryptocurrencies, or through reforms to the global monetary system, the world must find a way to address unsustainable levels of debt and the threat of [...] Monetary debasement, that is, reducing the value of money by increasing its supply, has repeatedly led to economic turmoil throughout history. In the Roman Empire, emperors diluted silver coins with cheaper metals like copper to fund military and economic expansion, which eventually caused inflation, disrupted trade, and led to social unrest. Sometimes, citizens contributed to debasement by shaking coins in a bag to wear down the edges, collecting the metal shavings to mint new coins. This

• Devaluation of the Dollar | Research Starters - EBSCO

  The devaluation of the dollar refers to a reduction in the value of the U.S. currency compared to other currencies, which can have significant implications for international trade and economics. This process became prominent during the late 20th century, particularly following the collapse of the Bretton Woods Agreement in 1971. Initially established in 1944, the Bretton Woods system pegged the dollar to gold and set exchange rates among major currencies, with the dollar serving as the primary [...] By the early 1970s, speculative pressures in foreign exchange markets and a declining U.S. gold reserve prompted President Nixon to suspend the dollar's convertibility into gold. This action effectively marked a devaluation of the dollar and was later reinforced by the Smithsonian Agreement in December 1971, which aimed to stabilize exchange rates. The shift to floating exchange rates created volatility in international markets and altered trade dynamics, as countries began to rely less on the

• 'The debasement trade': is this what's driving gold, bitcoin ...

  Investors are piling into assets such as gold, bitcoin and shares amid worries about government debt, central bank independence, and the weakness of major currencies such as the dollar. The trade has even been given a moniker: the “debasement trade”. But what does it mean? Explore more on these topics Business Stock markets Gold Bitcoin Currencies Cryptocurrencies Commodities explainers Share Reuse this content ### Most viewed

• The Reign of the U.S. Dollar: Exploring Its Past, Present, and Future

  The situation worsened in the late 1960s due to rising U.S. inflation driven by fiscal spending on military engagements and domestic programs. Foreign countries became increasingly unwilling to absorb the growing supply of dollars, further straining the system. In 1971, under mounting pressure, President Nixon suspended the dollar’s convertibility to gold, effectively closing the “gold window.” Later that year, the dollar was devalued to $38 per ounce of gold and again in 1973 to $42.22 per [...] In October 1976, the U.S. formally removed all ties between the dollar and gold, marking the end of the Bretton Woods system. While its collapse began with the introduction of the two-tier gold system in 1968 and the suspension of gold convertibility in 1971, the framework it created for international trade and economic cooperation persisted. The U.S. economy remained the largest and most influential globally, with a GDP of $1.68 trillion in 1975 (see Figure 3), ensuring the continued dominance [...] Another concern, not extensively discussed in this paper but central to public discourse, is inflation. The graph below illustrates the declining purchasing power of the dollar since the 1930s. For context, $1 today would have been able to purchase $18 worth of goods 100 years ago in 1924, reflecting a steady erosion of value over time (see Figure 7). This has led many to question the dollar’s effectiveness as a store of value, prompting interest in alternative currencies or assets. Bitcoin and

• De-dollarization: The end of dollar dominance?

  This communication is provided for information purposes only. Please read J.P.Morgan research reports related to its contents for more information, including important disclosures. JPMorgan Chase & Co. or its affiliates and/or subsidiaries (collectively, J.P.Morgan) normally make a market and trade as principal in securities, other financial products and other asset classes that may be discussed in this communication.This communication has been prepared based upon information, including market [...] communication without first obtaining express permission from an authorized officer of J.P.Morgan. [...] 15.2%, while Asia (excluding China, Singapore and Hong Kong) has the lowest rate at 9.7%.