Why does the US have so much gold in reserve compared to any other country?
In: Economics
Up until very recently, gold was very important financially during war time. Even though it’s not as relevant now, the US has built up a lot of gold over time from being in war so much.
Money used to be based on the value of gold and gold could be used by banks to pay depositors, trade paper money, and support the value of paper money.
Nowadays war doesn’t depend on gold so much and money’s value is not based on gold, so the gold reserve is an artifact of the nation’s history.
The short answer – Because World War I and II
The slightly longer answer – Because during World War I and II the USA was the greatest supplier of war material the world has probably ever seen. Oh and we’re also unscrupulous warmongers who don’t mind making a profit on the wars of others.
The even longer answer – During World War I and World War II the USA managed to stay out of the conflict at least at the outset. In addition, the wars were basically fought everywhere BUT the Americas so while Europe was busy blowing itself to pieces and Asia wasn’t much better the US was happily chugging along with undamaged infrastructure and minimal stress.
What this ended up meaning is that the warring Powers (mostly the Allies since they controlled the seas making it impossible for US ships to reach the other side) needed enormous sums of war material, and who should be willing to step into the brink and make a tidy profit? Well of course the US of A! During both World Wars Europe shipped its immense wealth (including most if not all of its gold) to US to either prevent it from falling into enemy hands or to pay for at least part of the simply ludicrous amount of stuff we were selling them. Come the end of these wars, basically all the gold in the world was in the USA’s vaults.
The US is a large country, 75% of the population of the whole EU. It also has a large economy.
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