Vol: 67 Issue: 27 Friday, April 27, 2007
In January 2000 , the Dow Jones Industrial Average set a new record of 11,722. In October, 2000 the Euro was worth eighty-two cents US. Oil was under $30.00 a barrel. A gallon of gasoline peaked in 2000 at $1.56, up more than fifty percent from the 1999 low of $.90 a gallon.
(Was 1999 really THAT long ago? In 1999, I could have filled my RV from empty for about sixty-five bucks. Yesterday, the same fill-up in South Carolina would have cost me $216.75.)
On April 25, 2007, a barrel of crude was worth $65.12, and the national average for a gallon of gas is $2.97. The Dow Jones just broke a new milestone closing above 13,000.
And the Euro, which was worth eighty-two cents seven short years ago, is now worth $1.36 against the dollar.
What is up? According to most business report headlines, the problem is “slow US growth.” If the Dow continues to soar to such dizzying heights, the price of crude and spot gas prices are determined by supply and demand, then ascribing the cause to ‘slow US growth’ seems somewhat confusing.
That isn’t to say that there aren’t early warning signs of an economic downturn. The housing market really IS beginning to slow down. And the first quarterly Gross Domestic Products reports for 2007 are the weakest in four years.
THAT sounds bad, until one considers that the overall US GDP in 2003 saw the most blistering economic growth spurt in more than 20 years.
And while the housing market is in a slump, personal consumption expenditures are up 2.2% this quarter, which is slightly higher than forecast. And way beyond the last quarter of 2006, when GDP growth was only 1.8%.
And, comparing this year’s first quarter with 2003’s first quarter, the last quarter where the GDP numbers were weaker WAS the first quarter of 2003.
If one reads the business news, the sky is falling. The end is near. Europe is eclipsing the United States as the world’s most powerful economy. And it is all because of the fiscal policies of the Bush administration.
The policies of the Bush administration may well be the reason that the Euro is crushing the dollar, but it isn’t the administration’s fiscal policies, but the Bush administration’s foreign policy that is to blame. Or rather, the world’s reaction to the administration’s foreign policies.
The Euro is rising against the dollar because the rest of the world has succumbed to the never-ending drumbeat of negative reports suggesting the United States is being led by a dishonest, warmongering group of out-of-touch neocons whose only allegiance is to Big Oil.
In point of fact, the Euro is rising because many oil-importing nations are paying for their oil in euros instead of dollars. Why is that important? There are a couple of reasons, none of which have anything to do with the Bush administration.
First, the dollar is an illusion. There is no such thing. A ‘dollar’ is a unit of measure, like a quart or a gallon, not a thing in and of itself. We get our word ‘dollar’ from the Dutch word ‘thaler’ — which is a weight of measure for precious metals like gold and silver.
No currency currently in circulation is named thaler. Several, however, are acknowledging its legacy with their names: twenty-three currencies named dollar, used in countries including Australia, Canada, Hong Kong, New Zealand and United States of America, which pegged the dollar to the weight of the Dutch thaler.
Dollar bills used to carry the legend, “Will pay to the bearer on demand, X dollars in lawful US currency”. Until 1933, “lawful US currency” was silver or gold. When FDR ordered privately held US gold confiscated, “lawful US currency” became a thaler’s worth of silver.
The dollar continued to bear the promise of redemption in lawful US money until 1967 when the legend was changed to read, “This note is legal tender for all debts, public and private,” in effect, BECOMING the thing it was supposed to measure.
The dollar, no longer backed by gold or silver, was now backed by the full faith and fidelity of the people of the United States — that is to say, it is an instrument of debt backed by America’s collective property holdings and future earning power. Your property. Your earning power. The dollar is a loan backed by collateral — your collateral.
People accept the dollar because they are confident that it will be honored as payment for goods and services in the future. When the dollar begins to lose its value, investors look for a more stable currency, in this case, the euro.
The dollar’s value is propped up by the price of oil. In 1971, Richard Nixon concluded a deal with the Saudis whereby they would only accept US dollars as payment for oil exports. Nations need oil. If the only thing that will buy oil is dollars, then the dollar holds its value.
Secondly, Iran and Venezuela are demanding payment for their oil exports in euros, instead of dollars, diluting the stranglehold the dollar has on international oil purchases. The net effect is that the dollar is losing strength against the euro.
So, while the stock market goes up, the US economy continues to enjoy net annual growth, etc., the euro continues to go up in value, while the dollar continues to decline on the international market. That means the dollar buys less, and the euro buys more. It makes US exports cheaper, but raises the cost of US imports.
It’s all very simple, really. It only sounds complicated, because the whole system is designed to be so complex that nobody will realize the dollar is an illusion supported only by the public faith it will still buy next week what it buys today.
As an economist once said of America’s ever-expanding economy, “Can a tree grow to heaven?”
Europe plays a leading role in Bible prophecy for the last days. According to Scripture, it will become the seat of the global government and the foundation of the global economy.
On the other hand, the Bible makes no mention of the United States of America during the Tribulation Period.
The Lord is coming again. In the words of the old hymn, “Coming Again”; “it may be morning, may be noon, may be evening, may be soon.”
The decline of the dollar and the rise of the Euro point in exactly the same direction that Bible prophecy says the world will go in the last days. Because these ARE the last days.
Oftentimes I close with the word, “Maranatha!” Some of you have written to ask what it means. It is an Aramaic word used by Paul in 1st Corinthians 16:22.
It means, “our Lord cometh.” Jesus IS coming again.