[6d0debc071]

The US is trillions of dollars in debt. The gold holdings in Fort Knox are a few hundred billion at most. You can't prop the dollar up with gold if there's a major economic boo-boo - the value just isn't there to offset such massive deficiencies. When they tried exchanging dollars for gold under the BW system they started to run out of gold.

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If anything's propping up the American Dollar, I suspect a far more likely culprit would be that OPEC primarily uses dollars - creating a demand for dollars in the international exchange markets.

[ashray]

Spot on. Every single month there is a drop in Indian Rupee value when oil importers sell rupees to buy dollars. It's possibly one of the main things that drives rupee value down and dollar value up. We had managed to reach a deal with Iran to buy oil in rupees but it's started happening only recently and in small percentages.

[jbooth]

China's Yuan peg is doing more to prop up the dollar's value than anything else. To maintain their low exchange rate which makes their exports relatively cheaper, they have to continually buy dollars with yuan.