![]() ![]() This put the USD back onto a strict interpretation of the gold standard and this was also one of the first instances in history where nation states fully negotiated and then voluntarily subjected themselves to an agreed upon collaboration between their currencies and their sovereign monetary policies. Toward the end of World War II with its sever price instability and seeing the need for stable currencies and the economic interconnectedness of nation states the Bretton Woods system was put into place. This effectively removed the USD from what was known as the gold standard and the Federal Reserve allowed for inflation as a way to hold together the economy during World War I, stabilized the dollar through the 1920's and in fact brought about deflation in the 1930's. The stated intent of the Federal Reserve at the time was to allow for currency elasticity through the ability to substantially impact the quantity of money within a short period of time. While initially anchored to the value of metals such as gold and silver, the untying of the USD to these "high powered money" standards began with the introduction of the United States Federal Reserve in 1913. This devaluation of the dollar is also referred to as price inflation which is measured by the United States Bureau of Labor Statistics and is known as the United States Consumer Price Index (CPI). In other words, the equivalent basket of goods that $1 could purchase in 1774 would currently cost $33.34 in 2010 USD. This evolution has occurred while its overall purchasing power has declined by more than 96.3% from 1774 through 2010. Over time the USD evolved through many standards of value to its current state as a floating fiat currency. The value of the USD was originally tied directly to the Spanish milled dollar when the United States Congress enacted the Coinage Act of 1982. The most common example is the price of automobile gasoline in the United States which is openly available and purchased daily by most Americans at a price listed to the thousandth of the dollar, for example a price $3.56 9/10 or $3.599. This 1/1000 or measure in mills, is an internal unit of calculation and why many taxes, fees, and even some retail prices, depending upon these taxes and fees, are priced with to the third decimal place. The currency unit for the issuance of the dollar is set on 1/1000 increments in spite of the lowest denomination in issuance being the penny, valued at 1/100 of a dollar. ![]() The current circulation of the USD is just over 800 billion, a number just below the circulation of the euro which is currently 816 billion. There are also 23 more countries, not yet included in either of these categories that have officially pegged their local currency to the USD, these currencies include the Belize dollar, Lebanese pound, Saudi riyal, Jordanian dinar, United Arab Emirates dirham, and the East Caribbean dollar just to name a few. In addition to these countries that use the USD as their primary currency, 14 other countries use it as their unofficial currency, these countries include Cambodia, Lebanon, Palau, East Timor, The Bahamas, and the Marshall Islands. This includes such countries as Panama, Ecuador, El Salvador, Puerto Rico, Guam, U.S. In addition to being the World's largest reserve currency the USD is officially used by 14 countries as their primary currency. It is also the currency for the Turks and Caicos Islands as well as the British Virgin Islands, both of which are overseas territories of the United Kingdom. The USD is the the worlds largest reserve currency, the most used currency in currency pair trades, and the primary currency used in the United States of America and its territories. USD is the currency code for the United States dollar (USD), it is synonymous with US$, both of which are represented in accounting with the $ symbol. 1 US dollar is subdivided into 10 dimes, 100 cents or 1000 mills. ![]()
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