Why do we compare our country’s currency to that of US’s and determine our currency’s value?
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In the old days there was the Gold Standard, governments would keep a fraction of their currency in the form of Gold. You could show up to a government place and trade in their money for gold. However they sometimes needed to spend a whole lot more like, for example, having to fight a big war. After that, they would buy back some gold and go back on the gold standard.
During World War 1, all the big major European powers first spent all their gold on stuff from America, than went off the gold standard. After WW1, they didn’t have any gold left, and America had all the gold. And they were all wrecked pretty bad, so they couldn’t afford to buy back the gold from America to get back on the gold standard.
So instead of buying back the gold, they decided to just use US dollars, since they had all the gold anyway.
Later on after WW2, the leader of the French decided to finally trade in their US dollars the gold, so instead the US president dropped the gold standard themselves, so they couldn’t trade in their US dollars.
So everyone just kept using the US dollars.
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