Gold or dollars

During WW 2 the US manufacturers produced war materials which were sent to the allies and in return they sent gold to the US. By the end of the war the US owned 70% of the gold. It was awkward for countries to trade with one another since they had to ship gold around the world so they all got together in Brenton Woods, NH and agreed to use dollars instead of gold. The dollar became the worlds currency. The gold was stored at Fort Knox and countries knew that they could trade their dollars for gold whenever they wanted. At that time the price of gold was pegged at $35 per ounce. This worked fine until the 1960's when the US was spending on the Great Society, the Vietnam War and the space program and countries got worried that the US did not have enough gold to back up all the spending. This created a crisis so in 1971 President Nixon said the US was going off the gold standard and this allowed the Fed to print up the money needed to finance all of the programs. This money is called fiat money and is no longer considered currency. At this time the dollar became king and all countries used the dollar for international trade. When the US needs money the Fed prints it up and gives it to the government. The government gives an IOU to the Fed and these IOU's are called bonds. The bonds are then sold at auction to other governments, pension funds, insurance companies and individuals. Now introduce trade deficits. When the US pays for its imports with dollars other countries can convert those dollars to their kind of money but when they do that it makes their money more valuable and it becomes harder for them to sell their products so they instead just use their dollars to buy more US bonds. This is what is meant by these countries devaluing their money something that China does on a regular basis. China devalues their currency while at the same their government subsidies their industries so they can sell products at lower cost. Since 1945 through all the ups and downs wages have increased 3.7% and inflation is at 3.1% so printing all of that money has not had a serious impact on individuals. Will this continue. As more politicians discover that the way to get reelected is to spend money this process will accelerate.