The US dollar’s debt to nervous central banks

As I was giving some soon-to-be-recycled newspapers a quick one-more-time review (it’s so hard to throw things away), a small commentary article by John Authers in the May 5, 2007, Financial Times caught my eye: “Dollar Bills are still looking decidedly crumpled.”  You can find the online version here, and I do not think it needs a subscription.

On one hand, the article offers nothing new — just a reminder that the fate of the US dollar is not really in the hands of the US any longer.  The natural forces that would normally affect a currencies value drive the dollar downward, while the unnatural dependency of the worlds nations on the US economy and their desire to prop up the US (and, therefore, their investments) in an effort of delusion-maintenance keeps them working to prevent the inevitable fall.  (I really think Gabor Steingart’s article on “America and the Dollar Illusion” — which I have referenced before — hits the nail on the head and describes the situation better than I ever could.)  On the other hand, the article does a good service as a reminder of the reality that so many ignore.

But there is a paragraph at the end of Mr. Auther’s article that struck me in an odd way:

“So what can bring the dollar higher? Mansoor Mohi-Uddin, forex strategist at UBS, suggests that central banks will have to stop selling dollars, while a rise in the perception of risk must scare investors into directing investment flows back into the US.”

Why did it strike me oddly?  I suppose because it reminded me of a line from a certain science fiction movie that played an admittedly prominent role in my childhood…

“Fear will keep the world’s central banks in line.  Fear of a falling dollar.”

(And if you recognize the movie line I have distorted here, what sort of geek you must be!)

In any case, unless this nation faces its need for repentance and turns to the God who established it and placed it upon the high places of the earth, it will face the fate prophesied of it long ago:

“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.”

Deuteronomy 28:43-44

And there’s not much the Fed can do about that.

3 thoughts on “The US dollar’s debt to nervous central banks

  1. Yep, I’m a certified geek; I readily recognize the line you parody. Which reminds me of another — one of many answers given by the characters of said movie to a classic question:

    Q: Why did the chicken cross the road?
    A: Fear will keep those chickens in line…fear of being hit by a car!

  2. Pingback: Investors play “hot potato” with US securities; Dollar beginning to sweat « Thoughts En Route

  3. Pingback: The Dollar and Functional Pretense « Thoughts En Route

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