LCG: USA Playing a Dangerous Game with the Dollar

Euro the Wind in Athens

The photo above is of an ancient carving of Euro who is supposed to be the southeast wind.  And now economic winds seem to be changing.  

Yesterday, in his latest commentary titled Has the U.S. become a bad investment?, LCG’s Wallace Smith stated:

The U.S. has been playing a dangerous game with the dollar for quite some time. While constantly giving lip service to a belief in the benefit of a “strong dollar,” the U.S. has been allowing the dollar to slide further and further in value for its own benefit: making our goods cheaper for other countries to buy and making the debts we owe less painful to our balance sheets. We have been assuming for some time that the confidence of other nations in America as a good investment will keep our gamble on the safe side of disaster, allowing us to fiddle with the dollar as well.

As a nation, the United States has been counting on the utter desperation of other nations who want to see their heavy investment in America succeed to motivate them to continually prop us up in a vicious circle. Other nations do not want to see their enormous investment in the, so they continue to prop it up with – what else? – additional investments. As acclaimed author on economics, Gabor Steingart, puts in his book World War for Wealth:

“Dollars are bought so they don’t have to be sold. The dollar is strong because that’s the only thing that can prevent it from growing weak. Reality is ignored because only by ignoring it can the dream come true.”

However, just as Mr. Steingart warns, it is not inconceivable that a time will come when those other nations see the downside of propping up their investment fantasy as outweighing the upside, and they will cut their losses and run – especially if an option more viable that the U.S. comes along. Is the news today about a flight of foreign investors away from U.S. investments a sign that that unavoidable moment is around the corner? Time will tell.

America’s foolhardy willingness to rely on being propped up by faithful foreign “lovers” should remind us of the prophetic admonishment of Jeremiah 30:14, “All your lovers have forgotten you; they do not seek you; for I have wounded you with the wound of an enemy, with the chastisement of a cruel one, for the multitude of your iniquities, because your sins have increased.”

Actually, even if a return to a sound economy can be salvaged out of this thickening financial quagmire, there will come a time when “they will throw their silver into the streets, and their gold will be like refuse; their silver and their gold will not be able to deliver them in the day of the wrath of the Lord” (Ezekiel 7:19). Regardless of whether or not the U.S. is able to win this round of the dangerous game it is currently playing with its dollar and its foreign lovers, ultimately the solution is all about repentance from sin, not a strong dollar.  Click here to read more.

Notice the relative value of the Euro:Title:               U.S. / Euro Foreign Exchange Rate
Series ID:        EXUSEU
Source:           Board of Governors of the Federal Reserve System
Units:              U.S. Dollars to One Euro

DATE         VALUE
1999-01-01  1.1591
2000-01-01  1.0131
2001-01-01  0.9376
2002-01-01  0.8832
2003-01-01  1.0622
2004-01-01  1.2638
2005-01-01  1.3123
2006-01-01  1.2126
2007-01-01  1.2993
2007-02-01  1.3080
2007-03-01  1.3246
2007-04-01  1.3513
2007-05-01  1.3518
2007-06-01  1.3421
2007-07-01  1.3726
2007-08-01  1.3626
2007-09-01  1.3910
2007-10-01  1.4233

Nov 6, 2007 “The euro rose as high as $1.4571 against the dollar, according to Reuters data, its highest level since its 1999 launch.”  – Reuters

Comments by COGwriter 

It is not just the Euro that is rising relative to the US dollar. 

Gold is something like $830 US per ounce, silver about $15.50 an ounce, and oil around $95 per barrel, hence in some respects the value of the dollar has dropped close to 30% since the first of January.

Yesterday, the US Federal Reserve dropped interest rates again in an apparent attempt to prevent a collapse of the housing market, discourage imports, and encourage exports.  And while this dangerous move may help in the short run, it appears that since August 2007 that the USA has taken a lot of steps which are inflationary (which most likely will ultimately result in further reduction in the value/purchasing power of the US dollar).

We in the COGs tend to believe that the European Union, even though it will have various problems (some severe), will become the dominant economic force in the world and that the USA will collapse economically then be overtaken militarily.

Two articles of related interest may include:

Europa, the Beast, and Revelation Where did Europe get its name? What might Europe have to do with the Book of Revelation? What about “the Beast”?
Who is the King of the North? Is there one? Do biblical and Roman Catholic prophecies point to the same leader? Should he be followed? Who will be the King of the North discussed in Daniel 11?

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