The Dollar Empire: How the U.S. Made the World Bank on It
You’ve probably heard the phrase: “Follow the money.”
Well, if you follow it far enough across the 20th and 21st centuries, it almost always leads back to the United States.
Pax Americana wasn’t just about military might or cultural influence—it was also about monetary power. In fact, much of the global system the U.S. built after WWII rests on a single, simple truth:
The world runs on the U.S. dollar.
Let’s unpack how that happened—and why it still matters today.
The Dollar as Global Reserve Currency
After WWII, the U.S. helped create the Bretton Woods system, which set the dollar as the central currency of global finance.
Back then:
Other currencies were pegged to the U.S. dollar.
The dollar was pegged to gold.
The U.S. became the anchor of the global economy.
Even after the gold standard ended in the 1970s, the dollar stayed on top. Why? Trust. Strength. Stability. And because… everyone else was already using it.
Today:
About 60% of global currency reserves are held in dollars.
Most international trade, including oil, is priced in dollars.
Countries stockpile dollars to stabilize their economies or pay debts.
In other words, the U.S. doesn’t just use money—it makes the money the world uses.
Petrodollars and the Oil Loop
One key moment in this story: the rise of the petrodollar system.
In the 1970s, the U.S. struck a deal with Saudi Arabia and other oil-producing nations:
Sell oil only in dollars.
In return, the U.S. would provide military protection and political support.
This meant every country that needed oil (i.e., every country) also needed U.S. dollars.
So oil exporters—like the Saudis—ended up recycling those dollars right back into U.S. banks, real estate, and government bonds.
It was a closed loop that kept the dollar strong, demand high, and American influence steady.
The Fed: Central Bank to the World
The U.S. Federal Reserve doesn’t just affect interest rates in Kansas or California. Its decisions ripple across the entire planet.
Why?
Global borrowing is often done in dollars.
Emerging markets watch the Fed to decide when to raise or lower their own rates.
During financial crises (like 2008 or 2020), the Fed becomes a lender of last resort—not just to U.S. banks, but to foreign central banks too.
This gives the U.S. massive influence over the global economy, without ever firing a shot or signing a treaty.
Control Through Capital
Being the issuer of the world’s reserve currency gives the U.S. power few other countries have:
It can impose sanctions by cutting off access to U.S. banks.
It can track money flows and pressure foreign governments.
It can borrow more cheaply, because everyone wants U.S. bonds.
In short: it can use money as a weapon—and often has.
The Empire of Spreadsheets
So while Pax Americana was backed by aircraft carriers, it was enabled by spreadsheets.
Military alliances kept the peace.
Cultural exports built goodwill.
But the dollar quietly made sure everyone stayed connected to the U.S.—willingly or not.
And that financial power became just as critical to the global order as any warship or diplomat.
What Comes Next
Next time, we’ll look at how different countries experienced this system—some as partners, some as clients, and some as outright critics.
Because not everyone was thrilled to live under the American-led world order—even if they were cashing its checks.