Many explanations I read come down to “almost everyone uses the dollar in international trade”, ” almost all energy is invoiced and paid in dollars” and “almost all international financial flows go through NY one way or the other”, but that just seems a restatement of the fact that the dollar is the reserve currency of the world. My question is: why? How did it end up that way?
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Pretty much the essence of fiat currency.
You sell pork, I sell tires. I want pork but you don’t want tires. We trade something of value to both of us. Back in the day it was gold and metal. Now it’s money that is usually backed by gold but that’s a different story.
I’m from country a and you’re from country b. We want to exchange goods but I don’t want country b currency because i may want to trade with person c who doesn’t want currency from country b. Everyone around the world, but countries n and z, take currency from USA. Therefore everyone trades in USD currency.
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