Many still do not know, that the value of banknotes is no longer based on gold.
Before we delve into this further, let us know the history of the creation of banknotes.
The creation of banknotes began in 1944 when the Bretton Woods conference was held to discuss the efforts to redevelop the world economy that was failing after the outbreak of World War II.
In this conference, the sitting countries have decided that the value of the United States dollar (USD) should be based on gold while other countries should be tied to the value of USD.
Through the conference, every USD currency printed should rely on the value of gold instead of gold currency because it is easier to use.
In the meantime, other countries can redeem gold in the United States (US) when they want to own gold. Unfortunately, the US government has printed more money than the existing amount of physical gold.
The French government began demanding gold for large sums of USD when the US did not have much gold. If other countries take similar action, the US will be filled with dumping banknotes with no more gold value.
Finally, the agreement was revoked in 1971. Beginning in the same year, the printed banknotes did not depend on the current value of the commodity, whether gold or silver. Banknotes continue to be printed out of control.
As Tun Dr. Mahathir Mohammad, the value of the USD is now worthless, just like toilet tissue.
If the world does not recognize the value of the USD, then the US economy will fall at any time and the Malaysian Ringgit (RM) will also receive tempias for leaning on the value of the USD.
From the historical sequence, what happened in the US once was happening in Malaysia now. The government now prints banknotes without relying on the value of gold and based on confidence and trust in its value alone.
Therefore, it is not surprising if the price of goods continues to rise because money is printed without control.
