It's lost over one third of its value against the European euro in the last 18 months. Since the US election on November 2nd it has lost almost 5% against the euro and is expected to continue its downward fall.

What is particularly amazing is that while the fall of the dollar is big news around the world, it hardly receives a mention in the US media. Most Americans are unaware of the dollar crisis and even those that are aware think it's a good thing. Their logic is simple: a cheaper dollar means that America sells more abroad while making foreign products more expensive at home.

While a great deal of attention is being given to the US federal government's deficit, which contributes to the problem, little attention is given to the current account (trade) deficit which is the primary cause. In the former, the US government is overspending. In the midst of the latest dollar crisis Congress voted to allow the Administration to overspend by another $800 billion, sending a signal to the world that nobody on Capitol Hill takes this seriously. But congressmen at least are aware that they are overspending when it comes to the federal deficit.

The same awareness does not seem to extend to the trade deficit. This monthly deficit is the difference between what America sells abroad and what Americans buy from overseas. The latest quarterly deficit was over $166 billion, over $55 billion per month.

How does America get away with it?

In two ways!

First, the United States is the biggest foreign market for many countries. Countless millions of jobs in the Far East, particularly in Japan and China (the two countries we borrow from the most) depend on Americans buying their products. So those nations have been willing to lend us money so we can buy their products.

But there's another reason the US has been able to get away with it. Most international trade is conducted in US dollars. So as the dollar goes down the amount of money Americans owe actually goes down in relative terms.

However, the dollar has now gone down so far that foreign holders of American assets are upset at how much they have lost. Just look at the figures—a European investing 100 million euros in the US two years ago would now be lucky to get back the equivalent of 70 million euros due to the greenback's fall against the European currency.

Making things worse, the US doesn't even seem to care. There's a perception around the world that America has deliberately stolen this money, allowing the US currency to slide to reduce the debt owed to other nations. The realization of this is leading many to prefer euros to dollars.

Russia's central bank announced that it would reduce its holdings of the US currency, replacing dollars with more euros. Tony Norfield, the global head of FX strategy at ABN Amro, "saw Russia's move as heralding the end of the dollar's pre-eminence as the world's reserve currency" (Financial Times, 11/24/04). One day earlier, the same paper's front page headline was "China tells US to put its house in order."

If the US government would act now to reduce the deficits (the best way would be to impose strict credit limits on everybody in the country!) it would restore confidence even though it might drive a lot of US businesses to the wall because of reduced sales. Instead, the federal government plans to spend even more money, thereby sending a signal around the world that nothing is going to be done about the deficit.

The Bible shows us that before the second coming of Jesus Christ another world business system—controlled by a union of ten European governments that the Scriptures call "the Beast"—will dominate the planet.

This economic system is also called "Babylon" in Revelation 18. Out of it are to come "ten kings who have received no kingdom as yet" (Revelation 17:12). "These will make war with the Lamb" (v. 14), clearly showing us that this federal system will be in existence immediately prior to Christ's return.

For the last six decades, the world has been dominated by the United States and the American dollar has been the chief trading currency. This could soon change if international confidence in the dollar continues to wane and people move their dollar assets into euros.