THE RISE OF THE EURO

The Rise of the Euro

The Rise of the Euro

The euro continued its ascent against the dollar. It is now at a level of about $ 1.60 per euro as of spring 2008. Last year? it continues to rise? spending a lot less than $ 1.33 per euro during this period. This means that planning for a trip to France is even more difficult? but here is some information on the monitoring of the euro against the dollar and to cope financially. (Sesit? 2003)

A year ago? from 200 euros / night hotel room in Paris for a week costs $ 1862 U.S. dollars. Today? that is $ 2185. You just lost $ 323 in cash on a trip in your travel budget alone. That is less money in trinkets? museum passes? the fashionable clothes or a nice dinner! More importantly? there is an upward trend does not bode well for travelers of the United States. (New York Times? 2003) If the euro becomes stronger? it means less money? even for American tourists in France. As the dollar continues its relentless six years against the euro and other major currencies? the question is asked more and more? which means that if the dollar ceded its global dominance of the Euro?1

The issue is serious? because the U. S. Federal Reserve is bringing up new dollars into the global economy at dangerous speed. A broad measure of U.S. growth in money supply growing at a pace not seen since 1971? when President Richard Nixon imposed price controls and ended the dollar's convertibility into gold? which comes roaring over 1000 $ per ounce. With consumer prices rising by 4 percent a year ago? wholesale prices and increased by 6.9 per cent? announcing consumer price inflation higher around the corner? we see the life of Milton Friedman famous dictum that "inflation is always and everywhere a monetary phenomenon? in that it can not be done without a rapid increase in the amount of money in production." (Sesit? 2003)

If the international use of the euro should continue to rise? the Fed would lose other powers. This does not work in developing countries. The people removed from the money anyway? not because the government feared that the collapse of banks? but because they are afraid of inflation and depreciation that printing money brings. (New York Times? 2003) Thus? the change in dollars? which undermines the assumption held by their central banks. But if the Americans are doing the same? selling dollars against euros in a crisis situation? The Fed becomes powerless. This is not science fiction. The U.S. investors have recently been paid money in bond funds at a record rate. (http://web.uconn.edu)

This occurs when investors? local and foreign? fear that the country faces a shortage of foreign capital needed to pay its debts. If the United States were to become obliged to trade and borrow in euros rather than dollars? which face similar risks. What American political power in the world? A falling dollar means ...