Image and title via Shakesville
I read the news today, oh boy: Euro reaches fresh high against dollar. And to think when the euro was introduced back in 1999 that many foreign exchange experts said it was "toilet currency". Now it looks primed to take over the US dollar as the currency of choice. Check it out. (Look at each chart, and notice how rival currencies are in an overall rise against the US dollar over the past year. The British pound sterling has been the most volatile of the four below, for reasons that I'm frankly unable to explain. Still, the British pound has generally increased in value versus the dollar over the past year.):
Euro vs. US dollar
Here's how it stacks up against other major currencies:
British pound vs. US dollar
Swiss franc vs. US dollar
Japanese yen vs. US dollar
Hell, even the Canadian dollar and the US dollar are damn near equal:
Canadian dollar vs. US dollar
The US dollar has been the benchmark by which all other currencies have been judged since WWII. Virtually every nation on Earth has at least a portion of their holdings denominated in US currency. Thanks to both record trade and government deficits, a recession, and a rapidly shrinking dollar, this will soon end the United States' 60+ year dominance in the currency market.
What does all this mean? Hell, I'm not an economist, so don't ask me any specifics, but I will offer this generalization about what this means to the American economy: We're screwed. By corollary I can also offer this second sweeping generalization about the economies of the remaining 190 nations on the globe: You're probably screwed too. When the US went through the Great Depression, so did the rest of the world. I can't see how that will differ greatly this time around.
Is there an economist in the house? Please correct me if I'm wrong, and please back your opinions with resources that are easy to understand for the lay person. I may be dumb, but I'm not stupid. Or is it the other way around? Okay, maybe I'm dumb AND stupid, but some other Sifters are not. Fool me once, shame on you. Fool me twice, and we won't be fooled again.
I really hope not.
The price of oil going up is that Americans are producing less and less. This increases our dependence on foreign oil. And this compounds problems due to the need in developing countries such as China and India. Oil is the life force of a country emerging into the 21st century.
Combine the global demand for oil with the reckless growing debt of UK and American consumers, Nations that are preparing for war, and the growing pains of developing nations. And you get a perfect storm of economic issues as yet unexperienced in a global economy that is fairly new and more interconnected then at any time in history.
MarineGunrock cannot award a quality point for this Sift Talk post because MarineGunrock does not have enough Power Points - ignoring quality request by MarineGunrock. (You can always purchase more Power Points.)
Bargain! Power Points now only 5$ US, or 1 €
Can't wait for some new coins for me to collect....or new implants!!-Hook me up baby, it's Babylontime!!
A possible time correlated cause for the dip last year was the run on the UK bank Northern Rock, but thats without checking dates or being an economist.
There is a common feeling in Europe that the Euro is highly inflated and unsustainable.