Why does the dollar continue to strengthen, has it really recovered?

Why is it so hard to find somebody who understands the reason for the strengthening Dollar. I will explain my understanding of the dollar's recent improvements and it will take the future to support my analysis, as well as the reader's belief, in my understanding of the points I am about to make.

Reserve Currency Status origins.
First and most importantly, it must be understood that the dollar is the Reserve Currency of the world. Yes, there is a basket of currencies, or SDR, they have more to do with pegging currencies today and are used by the IMF and others as part of the system of world trade -and are not used directly for payments, as, is the dollar. This dollar status has existed following the Bretton Wood Conference of 1944. As the majority of gold in the world was held by the US, followed by France, due to the international payments made by states to the US during WW1 and leading up the Second World War. America found itself with an opportunity to put itself forward, as the world reserve currency, as well as establishing itself as the newly formed world banker, with the addition of the IMF and World Bank. All of these new roles including the Food and Agriculture Organization (FAO) and the Nations Relief and Rehabilitation Administration (UNRRA) came from the Bretton Wood Conference.

This has given the US a unique opportunity above all States in the world. America is able to export its Fiat Currency and monetize (or print) its dollar with impunity to some degree. For as long as it continues to be the Reserve Currency. When central bank's monetize their currencies and are limited to that nation state's borders, this QE activity results in inflation, in most cases.

The background on inflation, QE style.
Now, lets look at how this helps the US at this time, more than any period of the past. When Quantitative Easing takes place with a State's Central Bank(S) (with the exception of the US), printing new Fiat Currency, as a rule, produce results that are very predictable in its effect on the economy. The group who first receive the new fiat currency or QE, feel 'all' of the benefits, because, it has not reached the pockets of the people or purchasers. By that I mean 'below,' the Central Bank(s), Government and Finance as well as Merchant Traders of the system -and specifically in that order. Once the newly available money is borrowed into existence, this money begins to circulate and compete for the existing commodities, goods and services, which begin to drive up the costs due to competition for the limited or existing resources. Where the full damage is felt, is, in the costs of goods and services to the ordinary person, who see the costs of their goods and services rise, due to competition, the additional Fiat Currency which now circulates, dilutes and increasing the costs of those goods and services.

War as an option.
The additional mechanism or option, which must also be mentioned is War. War has historically been very productive for the State and Private Finance, for economic reasons. Firstly, you can print with impunity again. Why? Because armament spending does not reach the streets, comparatively to peace times, during the war effort, due to the concentration of heavy manufacturing, away from consumer manufacturing. People are also more likely to be asked to support the war effort by reserving their expenditure and putting their savings into State Bonds to help the effort. At the end of the War, the potential inflation can be taken off the streets before it circulates -usually, by taxation and social service cuts, (or public spending). This allows the fiscal resources to accumulate, which can be destroyed or taken out of the economy before their effects are felt. The wealthier business owners are very happy to join the State during such times, as it enriches them, during the state contract procurement opportunities that are on offer.

Summary of the above.
With this backdrop, we can now look at how the US is benefiting at the present time. Because of the dollar reserve status, the QE policy of the US can leave its country's boarders avoiding the monetizing effects, as the QE circumvents the lower levels of the internal economy and goes abroad. The US or IMF are securitizing the bailout funding and the new US monetizing policy, can only be describe as the production of monopoly money, as it goes abroad, outside the internal economy and into the international economies of the EU, et al. Why? Because it is used to purchase foreign goods and services (or assets). The IMF are in the process of buying foreign assets with these new loans offered to distressed EU states, with debtor obligation and interest costs attached. Not to mention their sovereignty, which now comes under US controls. All paid for with newly printed Dollars and Bonds, which are sterilized in the process. The IMF/World Bank's debtors, are the real potential economic recovery machine for the US economy. There are very few reasons why the US could not continue to print any amount of fiat currency, without immediate danger to itself, as the US has cleverly expanded its internal monetary system to a world US dollar system.

Potential Danger 1.
The danger, as I see it, comes from a very small number of sources, of which I will now list. The EU monetary system could compete for the Reserve Currency status or be chosen by a group of nations, who no longer trust or are unhappy with America's position and economic condition. This makes the EU's present crisis, the first and main reason for the US dollar strengthening. As long as this EU crisis diverts attention from the US -and the European wealth holders worry, money will run to the only option open between the Reserve Currency options of the US dollar or Euro. Also, I believe they are aware of this point and are choosing to support the dollar as the preferred resting place. This will be more to do with the possibility, that, the EU monetary system is now being judged as a terminal case, to the real wealth holders in the European Monetary System.

Potential Danger 2.
Next, there are countries who are developing alternatives to the dollar system. Iran have been taking steps to develop an International Exchange alternative system to compete with many of the US and UK exchange services for the trade oil exchange markets. It should be remembered what happened to SH for selling oil in Euros back in the late 80's and early 90's.

Potential Danger 3.
Finally, there is a concerted effort on the part of a number of Eastern Block States to look for an alternative mechanism for international or global payment system as well as strengthening member relationships. These organizations were originally open to Anglo-American membership but were looked at as de jure by the western powers they are now de facto and the offer of membership no longer exists.

Summary
Looking back over the above objects and trying to give a view of which of these outcomes may be on the horizon, unfortunately, my understanding of the overall macro political environment sees the second danger having the most likely outcome. If the global powers can not make use of the EU crisis to improve their position and the issues move back to the parities listed in the statement. I see a real possibility of the expansion of offensive foreign policies expanding in the Middle East. This global crisis has not -and will not, go away. Why, because the systems have not changed in their intentions or direction, it has simply moved the next stage of the game.

I little bit of reality, from the late great George Carlin in 2005, a truly missed individual. George died on the 22nd June 2008. His warnings in the show are HERE AND NOW!