America's weak economy and the fear of an impending recession has been the cause for this decline. As Ben Bernanke, chairman of the Federal Reserve put it, the situation of the U.S. economy is "less favorable" and we probably will face "more sluggish economic activities in the coming weeks and months." By any analysis, that is a gloomy prediction. Our enormous trade deficit with foreign countries and the U.S. budget deficit most likely have triggered this currency problem.

In the past the dollar has been the world's economic engine. But with such a strong euro, we are entering a new phase with some predicting that the dollar might lose its place as the number one currency in the world. Some envision the danger that other countries will stop basing their trade on the dollar and might search for a more stable currency. At the moment that seems very unlikely. Eighty-six percent of the global daily currency transactions are in dollars. Despite the fact that European countries more frequently pay for their oil with euros, the greater part of the oil trade in the world is still based on the dollar. To push the dollar out of its number one position would not only require a major overhaul of the world's monetary system, it would take some years to carry this out.

At the moment, Americans are more concerned about inflation, high oil prices we are now paying over $100 a barrel the housing crisis and unemployment than a low value of the dollar. This is not a question of reduced luxury imports from Europe, no more French wines or Belgian chocolates. The weak dollar could cause higher prices for basic imported goods such as electronics, raw materials, manufacturing parts, clothing, and food, which would result in an even larger trade deficit. And the European vacation we have dreamed about will cost a lot more.

However, there are also some benefits of a weaker dollar. Tourism to the United States will most likely increase, since visitors will find traveling and shopping here far more appealing. Products which the United States is exporting will become more competitive on the European and world market and demand for these products will step up. Hopefully that should create more jobs in this country.