I find it fascinating that so few people know this about their money.
Actually, even calling it money is a bit misleading.
It’s actually currency. According to Wikipedia “The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value;”
The key there being a store of value. Money used to hold it’s value.
That was until August 15th, 1971 when Richard Nixon unhinged the US Dollar from it’s gold backing, instantly making it (and the world currencies pegged to it) a fiat currency.
So what’s a fiat currency you ask?
Well, essentially it’s a currency backed by nothing more than the faith of the people using it.
That means, it has no true value. It’s only value is what people believe it is worth. Once that confidence wanes, the currency generally collapses (an has hundreds of times throughout history)
Currently the US Dollar is the reserve currency on the planet, and has been for over 70 years.
Previously, the British Pound Sterling held that status, and before that France held that role, proceeded by the Netherlands, Spain and Portugal.
By studying history you can see that empires lose their reserve status, and it’s generally as a result of recklessly inflating their currency, much like the US is doing today.