The graphic displayed on this post is old — March 2, 2011, in the Wall Street Journal. But I’ve held on to it because (1) the report that week on the dollar was excellent, and (2) well… That’s a great graphic!
And it fits the news item today in the Wall Street Journal: “In 2011, Whither Skeptics of Euro?” (No paywall!) When the Greece crisis was churning last year, many bet that the euro’s strength would fall against the dollar. The dollar may be in bad shape, went the thinking, but it’s still a safer bet in this climate. While looking promising at first, those bets have proven wrong, and the euro is up 20% over its relative value versus the dollar compared to this time last year. However, it isn’t necessarily the euro’s inherent strength that is providing such growth, as a comparison to the Swiss franc demonstrates: the euro is down 13% versus the Swiss franc compared to last year. Why up so high against the dollar and so low compared to the franc? As reported in the WSJ article, comparing the euro to the Swiss franc means comparing it to a healthy, stable currency, demonstrating that the euro is having some difficulty due to fears about Greece.
Which, in turn, sheds a harsh light on the dollar. Not only is it not a healthy, stable currency, but the fact that it makes the euro look so good means it is even worse than it appears. The fundamentals of the euro are shaky. The fundamentals of the dollar are horrible. As the article points out, those who were bullish on the dollar versus the euro had no idea that the Fed would act so irrationally over the last year (or, perhaps, that the underlying market realities would make such irrational, desperate behavior seem so convincingly necessary).
The Bible describes a sinful Israel in a state of debt to foreign nations that it will regret: “The alien who is among you shall rise higher and higher above you, and you shall come down lower and lower. He shall lend to you, but you shall not lend to him; he shall be the head, and you shall be the tail” (Deut. 28:43-44). [Recent stories of foreign nations & individuals gobbling up real estate deals and businesses adds another element to this.] And Proverbs makes clear the relationship of those who owe to those who hold the IOU: “The rich rules over the poor, and the borrower is servant to the lender” (Prov. 22:7). Habakkuk’s poetic warning to the ancient Chaldeans about “creditors” rising suddenly (Hab. 2:6-7) might come to the minds of America’s policymakers — if any of them read their Bibles, of course.
[Obligatory note: Undeniably, Habakkuk's warning is not to America, which would defy all principles of biblically correct prophetic understanding, nor was he speaking of literal debt. But if the fundamental relationship between debtor and creditor were not true, Habakkuk's metaphorical warning about Babylon would have rung false.]
Let the speculators speculate, let the currency traders trade, and let the gold and silver buyers buy. Ultimately, the only thing that will truly make a difference is repentance and turning to God. It would be wonderful of a wave of national repentance swept over the United States, and, for my part, I will continue in that hope as low as the probability may be. But whether the nation as a whole does or doesn’t, as an individual I don’t think I would wait…