Monday, January 08, 2007

Euro Takes Over The Dollar's Hot Seat

Privateer, in his December 29, 2006 commentary, points out this interesting fact:


[Thanks to Matt Carmody, cartoonist, over at synd.org, for the image.]

'It has recently been reported that worldwide, the amount of CASH Euros in circulation now exceeds the amount of CASH US Dollars in circulation. This is quite astounding. Please remember that the US Dollar has been the world's reserve currency since 1944. Please remember that to this day, the majority of all GLOBAL trade in raw materials and basic commodities is done in terms of US Dollars. For decades, and up to a very short time ago, the ultimate "getaway money" throughout the world was a ten or twenty or hundred Dollar bill to much of the "developing" and a lot of the "developed" world. And lastly, please remember that the Euro did not even EXIST as a CASH currency until the beginning of 2002.'

Good point. See my previous post for a discussion of the slipping of the dollar's prestige.

I had also heard of two alarming developments, both stories coming out of South America.

1. A friend was on a boat in the Amazon, and she was surrounded by local village children at one of the stops. The kids stuck their hands out in that annoying but good-natured custom of tourist-hitting. She reached in her pocket to pull out a $5 dollar bill, and the kid said: "No, don't you have any of those other ones, the euros?"

2. Last year, a large drug bust in South America turned up a suitcase full of -- no, not dollars; euros. As I pointed out before, this could be one of two things: Either the Europeans are getting into cocaine in a big way, but that seems like nothing new; or it could be that the tide is shifting for the US dollar.

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