David McWilliams

So when those American servicemen, those American soldiers, GIs, went into a bank in Germany,

are the subsidiary of an American bank in Germany, they had to be able to do their banking in dollars because they didn't want to accept the currencies, in effect, the Mickey Mouse currencies of Europe.

So they required dollars.

So the banks who were subsidiaries of the United States in dollars

Europe simply started to make loans in dollars to these American servicemen.

So if the American servicemen wanted to buy a Cadillac, for example, and they were based in Germany, or they wanted to buy, you know, an Elvis Presley album, or they wanted to buy something, they needed dollar accounts.

No, no.

But you see, you think is after the Second World War, all goods were American because Europe's industry was completely decimated.

So anything you bought came from the United States.

So for a period of time, banks started issuing dollar denominators.

loans and then they kept issuing dollar denominated loans so you'd arrive up and you'd say i want to trade with the united states and i need let's say a facility of 100 million dollars and they'd say okay fine we'll give you that that's fine so what you had was a banking system in europe

This is where the euro-dollar comes from.

A banking system in Europe that had assets on its balance sheet that weren't dollar-denominated, but was issuing dollars to Americans and to European companies.

And because gradually after the Second World War, all things began to be priced in dollars.

Oil, commodities, steel, heavy metals, all these sort of things that the world traded,

Rather than go to America to get your dollars, you can just go to your normal bank and say, could I have a dollar loan?

So this euro-dollar system emerged from the real economy.

And then, of course, the financial economy in the 1960s, 1970s, and 1980s, they started issuing these loans and debts in dollars, right?

They started issuing dollar debt.

This all grew up parallel to the American economy, right?