Dickson C. Igwe. Photo: VINO/File

In essence, the Dollar is a monopoly. The Dollar is hegemony. Then, the largest and most powerful corporations on earth are U S organizations. The Federal Reserve and the Dollar are the key tools for managing this hegemonic power of the USA.

The preceding assertions on Dollar power is simply a continuation of the Post-World War Two reality. The USA emerged from war the sole super-power in control of world capital markets. It was the only ally coming out the war with a balance of payments surplus. That surplus came from its industrial power and its monopoly in armaments manufacture. The USA was the armaments manufacturer for World War 2. It turned its plough shares into weapons of war. That transformation is what gave the allies the victory.

That Second World War destroyed critical infrastructure in Europe and Asia. Major cities such as London, Berlin, Stalingrad, Moscow, Tokyo, Hamburg, Dresden, and Hiroshima were bombed into ruin. The USA however, emerged with its manufacturing and industry intact. War did not touch the USA mainland. 

Then the USA financed the rebuilding of the west after the war. It did not do this out of love. It did that by offering its industry and debt in Dollars to allies such as the UK, France, and Russia, and enemies like Germany and Japan. The USA offered debt to the countries destroyed by the war to pay for reconstruction. That debt came in the form of Dollars. It was a loan.  

The Dollar post Bretton Woods backed by gold was the measure of value for everything from commodities, energy, and metals to new technologies and new industrial processes. Until the present day, the Dollar – no longer gold backed- decides value: from the hygiene products, we all use when we wake up in the morning to the food we eat, the homes we live in, the appliances we use and the choice of vacation, insurance and investments we adopt. 

The USA was the world’s economic powerhouse. Gold originally backed the Dollar. Later, the crucial backing of the Dollar derived from US power and trust in that power by the rest of the world. 

The trust and confidence factor.