this fundamental analysis was written by Dr. Mike Campbell for dailyforex.com
Once upon a time, all international trade balances had to be settled by the transfer of gold, but eventually, the sheer volume of international trade brought that era to a close. It was replaced by a US Dollar-backed gold standard where deals could be settled using fiat money (US Dollars) which could be swapped for gold. This standard came crashing down in the Nixon shock when the link between the currency and gold was broken. The spot price for gold metal on the metal exchanges had risen well above the “paper money” value and speculators were redeeming Dollars for more valuable gold metal and making a killin Today, most major currencies are readily inter-convertible, but not all. If companies in China and Japan wish to do business, Yens and Yuans must first be converted into US Dollars and the Dollars converted into the target currency.
I loved the language
If you read closer, you'll see, in that very paragraph, the reason why the U.S. financial institution is in shambles and pretty much worthless. (Could it be because the money is worthless already since it isn't worth anything?)