"Think of it like the solar system: It started with gold at the center, as the sun, but then Jupiter got bigger and bigger until all the planets started circulating Jupiter instead."

Comment: a good read on the currency crisis. My head spins trying to understand it all but this is helpful.

Currency Chaos: Where Do We Go From Here?

Excerpts:

"The problem started before World War I," Mr. Mundell commences. "The gold standard was working fairly well. But it broke down because of the war and what happened in the 1920s. And then the U.S. started to become so dominant in the world, with the dollar becoming the central currency after the 1930s, the whole world economy shifted.

"Think of it like the solar system: It started with gold at the center, as the sun, but then Jupiter got bigger and bigger until all the planets started circulating Jupiter instead."

"And the U.S. is Jupiter?" I deduce.

"Yes," he affirms, "and the spread of the dollar was just miraculous as it became the anchor for the Bretton Woods fixed exchange rate system after World War II. The price of gold was fixed at $35 an ounce in 1934, but by the time the U.S. got through the Korean War, the Vietnam war, with all the associated secular inflation, the price level had gone up nearly three times.

"Gold became very undervalued; European countries traded in dollars for gold until the U.S. lost more than half its stock. The U.S. went off gold in 1971, under Nixon, and nobody else has gone on it again."

...

"So our problems today," I posit, "are related to the fact that the Bretton Woods system of fixed exchange-rates linked to gold broke down?"

"The system broke down," he hastens to explain, "not because of fixed rates. Fixed exchange rates operate between California and New York . . . the system broke down because there was no mechanism to keep the world price level in line with the price of gold."

...

"The U.S. berates China for its exchange rate policy, which Washington doesn't like," Mr. Mundell says, noting that discriminatory tariffs against China might not be legal under the treaty provisions of the World Trade Organization. "But one-sided pressure on China to change its exchange rate is misplaced."

Shaking his head, Mr. Mundell asserts: "The issue should not be treated as a bilateral dispute between the U.S. and China. It's a multilateral issue because the U.S. deficit itself is a multilateral issue that is connected with the international role of the dollar."

Comment: I added a several links that may be helpful. Note link to the Federal Budget deficit!