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Plain Truth Magazine
October-November 1978
Volume: Vol XLIII, No.9
Issue: ISSN 0032-0420
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Gene H Hogberg

The U.S. dollar is on its way down and out as the free world's leading currency. Its place may soon be taken by a powerful European currency unit (ECU) heavily backed by gold and the mighty deutsche mark. When that happens a United Europe in command of world trade will be but a step or two from reality — setting the stage for remarkable prophecies in the book of Revelation.

   Convulsive changes are about to rock the economic system of the free world to its very foundations. Yet, tragically, few Americans, Britons or Canadians seem to be awake to the economic disaster that could be just over the horizon for their nations.

The "Post-Dollar" Era

   Within only a few months the once mighty but now anemic American dollar may be toppled from its privileged position as the world's kingpin currency.
   America's leading trade partners in Europe, resigned to the dollar's terminal illness, are already preparing for the post-dollar future. They are on the verge of establishing a powerful new European monetary fund, backed heavily by gold and the West German mark. This fund will be denominated in European currency units, or ECUs, which in turn will be the forerunner of a future single European currency.
   This currency, when it is established, will be in much demand around the world. Future runs on the dollar could make the monetary exchange crisis of the past several months look like child's play.
   But we're getting ahead of the story. Let's back up a bit for some recent background events.

The Summit That Solved Nothing

   The crisis afflicting the free world's economies has been steadily building up throughout the decade of the '70s. A major negative factor has been the quintupling of oil prices in the aftermath of the Mideast war of 1973.
   In the United States, inflation, fueled mainly by a string of monumental federal budget deficits — $120 billion in the last two fiscal years alone — is threatening to get out of hand. The nations of Western Europe, conversely, confronted with stagnant economies and growing unemployment, have never quite recovered from the worldwide recession of 1974. In Japan, a sluggish domestic market has forced that nation's awesome industrial output increasingly into export markets, principally the U.S. and Europe, raising calls for protection of home industries.
   This past July, in an attempt to iron out the many problems in their complex trade relationships, the heads of government of the free world's leading industrial powers — the United States, West Germany, Japan, France, Britain, Italy and Canada — met in Bonn, West Germany.
   The so-called World Economic Summit Conference — attended by this writer — ended with optimistic predictions for the year ahead. In the concluding press conference, however, it was very evident that the leaders of the "big three" nations U.S., West Germany and Japan — were severely limited by political constraints on the home front.
   President Carter pledged to strengthen the dollar by cutting oil imports — though he made no promise to act decisively and unilaterally if the U.S. Congress continues to hold up his long-stalled energy legislation.
   Chancellor Helmut Schmidt of West Germany, for his part, announced a modest package to boost government spending, one that he had been planning to introduce anyway. Any attempt to pump up the economy more than his stipulated one percent would have evoked cries from Bonn's conservative opposition that Schmidt was leading Germany once again down the ruinous road of "Weimarstyle" inflation — which, as history shows, helped pave Adolf Hitler's path to power.
   Prime Minister Takeo Fukuda only offered to keep Japanese exports next year from rising above this year's level. But since the yen is rising and the dollar is dropping, this mea ns an even greater Japanese trade surplus than last year's record $17 billion. To actually cut exports would mean increased unemployment — a political risk that Japan's big-business-oriented Liberal Democratic Party, which has been slowly losing strength over the years, feels it cannot afford to take.

Dollar Crisis Ignored

   For a day or two after the Bonn summit, the mild euphoria that such conclaves engender seemed to have pumped a bubble of new confidence into the West's fragile economic system. "Bonn has successfully bought time," intoned an editorial in the Times of London.
   But hardly was the ink dry on the summit's evasive, nebulous final communiqué when it became abundantly clear that nothing had really been resolved. The reason: No action had been taken with regard to the most critical problem in the eyes of America's trading partners — what to do about the plummeting value of the U.S. dollar — a crisis which affects the entire free world, since the dollar, weak though it may be, is the world's leading reserve currency.
   This central problem, in fact, was not even an official item on the agenda. The Americans, accused by their partners of treating the sick dollar with "benign neglect" for many months, had come to Bonn determined to play down the problems of the dollar. The American view prevailed that the Bonn meeting should deal only with trade imbalances and how to stimulate world economic growth.
   Within two or three days of the summit's conclusion the foreign exchange markets went wild again, as money managers unloaded hundreds of millions of unwanted surplus dollars (there are over 500 billion so-called "stateless" dollars outside U.S. boundaries and thus outside of effective U.S. control) in search of stronger currencies such as the Japanese yen, the Swiss franc, and the West German mark.

Why the Dollar Is Sick

   U.S. currency inspires no confidence today largely because there are many more dollars in foreign banks than are needed or wanted. Moreover, the supply increases every year as the United States continues to run up both huge federal deficits and balance-of-trade losses.
   Prospects for a solution to the dollar glut seem remote. America's record balance-of-trade loss of $26.7 billion for 1977 is certain to be topped this year.
   America's trade partners are angered at Washington's all-too-obvious strategy of letting the dollar drop still further in the hope that I) American exports can obtain a competitive edge worldwide, and 2) imports to the U.S. will decrease because they will become too expensive.
   This deliberate debasement of the dollar's worth not only doesn't work (inflation inside the U.S. robs U.S. manufacturers of their supposed advantage over imports), but it hurts everybody, not just Americans. Worst of all, it gives a clear message to others that the U.S. either doesn't know how or doesn't want to manage its economy in such a way as to give the dollar any lasting value.
   Don't Americans realize, ask the Europeans and the Japanese, that the dollar serves not only as America's medium of monetary exchange, but other countries also use the dollar and have a vested interest in the maintenance of its value?

Too Much of a Good Thing

   Ever since the end of World War II the dollar has played a role most Americans have only a scant knowledge of: It acts as the international "reserve currency" — meaning that other countries use U.S. dollars as the store of wealth that backs their own currencies. These dollars are used, furthermore, to settle debts in international trade. In fact, over two-thirds of international trade is transacted in dollars.
   For a considerable period, as long as the dollar was "as good as gold" and international trade continued to boom, foreign countries and their central banks were willing — indeed eager — to hold growing supplies of greenbacks. A steady, but manageable, deficit in America's balance of payments ensured access to the coveted currency of the world's largest economic power.
   The flexibility of the dollar as opposed to a rather stable world supply of gold, which then carried a fixed price of only $35 an ounce, helped fuel the great worldwide economic expansion period of the 1960s.
   Despite this rapid expansion of world trade, the United States government was held to a certain amount of internal monetary discipline by virtue of the dollar's convertibility into gold. In other words, U.S. presses could not go wild printing dollars since foreign central banks could exchange excess paper for the gold in Fort Knox.

Shutting the Gold Window

   However, in 1970, when the United States began to seriously live beyond its means in foreign trade, confidence in the dollar slackened. Foreign central banks began a run on the U.S. gold hoard. The U.S. solution to the problem was not to put its own house in order (perhaps by suffering a politically undesirable economic "adjustment," or recession), but to slam the "gold window" shut in 1971. No longer was the dollar convertible to gold.
   More than a year later even the attempt to maintain fixed exchange rates — the key feature of the Bretton Woods agreement of 1944 — was abandoned. Since 1973 currency values have been "floating" on the market, at times violently, and the value of the dollar has steadily eroded.
   Still, up until now there has been no substitute for the dollar as the world's leading reserve currency. (British sterling once played a major reserve role, but the decline of Britain's economy no longer allows this role.) With the gold window shut and restraints upon the government's overspending neutralized, the United States has been able to take undue advantage of the privileged position the dollar has enjoyed. The U.S. has been able to pile deficit upon deficit and literally leave its trade partners holding a larger mountain of cheapening dollars.

Cheating Our Creditors

   America is finally beginning to pay a penalty for its years of profligacy. Yet the U.S. federal government continues to pile up deficits every year — even in good years.
   Congress, for example, has just raised the "temporary" ceiling on the national debt to $798 billion. Deficit spending has doubled the national debt in the past ten years. If spending trends continue, this mountainous debt could reach $1 trillion in the early 1980s.
   Writing in the August 1978 issue of Atlantic Monthly, author Martin Mayer, in an article entitled "The Incredible Shrinking Dollar," noted : "Inflation in America not only disrupts and demoralizes our own society but also in [Winston] Churchill's terms, 'cheats our creditors.' The nations that hold dollars as their reserves are entitled to our best efforts to maintain the value of those dollars by restricting both our domestic budget deficit and our balance of payments deficit."
   Continues Mayer: "Insisting on our power to print the world's money at a time when the world would prefer to get its money some other way will not earn us the good opinion of mankind; it will get us a reputation as chiselers. And... we can't get away with it much longer."

Enter the ECU and Prophecy

   Author Mayer also predicted that sooner or later the world's major trading nations would have to find a way to spread the reserve function of the dollar around a group of other currencies.
   This new method — coming much sooner than Americans realize — is already on the drawing boards.
   One week before the Bonn summit, at a conference of Common Market heads of government in Bremen, West Germany, Chancellor Schmidt unveiled his plan for a "zone of currency stability" in Europe. Cosponsor of the scheme is France's President Valery Giscard d'Estaing.
   The Bremen agreement calls for each country joining the European monetary system — which will also be open to countries outside the Common Market (such as Sweden, Switzerland and Norway) — to place 20 percent of its gold and dollar reserves in a central pool which will be denominated in "European currency units," or ECUs. The ECU's value will be close to that of the dollar but will not fluctuate like the dollar.
   In addition to this pooling of gold and dollars, each country will add a comparable sum of its own currency — francs, marks, pounds, lire, etc. — to the central reserve, which could then have at its disposal something like $50 billion — more than the reserves of the International Monetary Fund.
   According to the thinking at Common Market headquarters, the major features of the ECU plan, if approved at the December Common Market summit conference in Brussels, could be put into force as early as this coming January I. And, as the Wall Street Journal of July 12, 1978, adds, "As early as five years from now, predict the most optimistic aides, the Common Market could be ready for work on a single European currency to replace the existing national currencies, right down to actual paper money and coins."

Impact of Schuman Plan

   Don Cook, Paris correspondent for the Los Angeles Times, was quick to recognize the awesome import of the new monetary scheme. He likened it in scope to the Schuman Plan of 1950 which launched the European Coal and Steel Community, forerunner of today's nine-nation Common Market. Reported Cook: "By agreeing to create a new
"A disciplined European monetary bloc... would provide the basis for a single European currency that could eventually take over much of the dollar's role as an international medium of exchange." New York Times July 30, 1978
European monetary system, the Common Market heads of government took what will probably turn out to be the greatest leap forward in European unity since the Schuman Plan of 1950."
   Cook noted another parallel to the historic Schuman Plan. "Again," he said, "it is the result of a convergence of the interests of the two nations that are at the heart of everything European — West Germany and France."
   And again, Cook also noted, the British were upstaged by the bold German-French strategy and had reservations about joining in. Said Cook: "Whether Great Britain decides to join or not, France and West Germany clearly will go ahead with the monetary scheme. Britain is therefore in much the same position as when the Schuman Plan was adopted in 1950. Britain stayed out, and then took 20 years to join Europe."

Dollar Skid Forced the Issue

   It is known that Herr Schmidt was originally quite cool to the ECU idea. When Britain's Roy Jenkins, present head of the European Commission and a leading exponent of the idea, again brought up the concept of a common monetary system at an EC summit in Copenhagen in April, Schmidt still had his doubts.
   In the succeeding months, however, Schmidt, witnessing the unabated slide of the dollar and the inexorable upward pressure on the D-mark, changed his mind. At a secret meeting in Hamburg in June, the chancellor and the French president agreed in principle on the new monetary alignment and arranged to jointly push for it at the Bremen conference. (British Prime Minister James Callaghan has criticized the secrecy in which the plan was developed between France and Germany.) In Bonn the Germans and French briefed the American delegation on the outlines of the monetary union, stressing that it was not intended as an anti-American gesture but that it had been given great impetus because of the dollar's decline. President Carter was noticeably cool to the whole idea and declined to give it his endorsement.
   American reservations or not, Bonn and Paris have set their course resolutely. And the Germans, especially, are flexing some diplomatic muscle to correspond with their economic strength. A dispatch in the New York Times of July 30, 1978, made this new fact of history abundantly clear: "President Carter and other Western leaders wanted him [Schmidt] to expand the German economy faster than he considered prudent, sucking in more imports, boosting world trade but risking renewed inflation. Mr. Schmidt refused to do this, offering only a modest stimulus.... Instead, he had already chosen to spend Germany's trade surplus — the fruit of its economic strength — on financing the further unification of Europe and increasing his country's diplomatic authority within Europe and abroad...."
   The powerful political impact of the German leader's decision on the monetary plan was also noted in this same Times dispatch: "The real issues at stake are as much political as economic. A disciplined European monetary bloc, underpinned by the Common Market's reserves, would provide the basis for a single European currency that could eventually take over much of the dollar's role as an international medium of exchange....
   "The independent line West Germany is starting to take in foreign affairs acquires wider significance against the background of the United States' fading world hegemony and Europe's increasing prosperity. It is yet another sign that the balance of power and influence within the West is shifting."

Protecting the Mark

   The Germans will be, by far, the biggest single contributor to the monetary pool. The normally prudent Germans are willing to make this commitment for a solid self-interested reason. Reports Business Week magazine, July 31, 1978: "For Germany, setting up a currency union based around the mark is a way of protecting its export competitiveness. If the European currencies float collectively against the dollar, any decline in the dollar that pushes up the mark would also push up the franc, the guilder, and the other currencies of Germany's European trade partners. Germany would thus retain its competitiveness at least within Europe, which absorbs half of its exports. More important, Germany could dictate conservative fiscal and monetary policies to Europe by controlling the new fund."
   The French, and others in the monetary union, will be able to have access to the 18 billion marks (about $9 billion) in the pool — but for a price: They will have to get their economies in shape, reducing their inflation rates to the low German level.
   And with all the currencies in Europe floating in concert against the dollar, what will happen to the dollar? The Business Week article suggests: "For the U.S., the proposed currency union can only spell more trouble for the dollar... the fund will openly advertise that it has 18 billion marks available to anyone wanting to dump dollars.... And once the ECU becomes a reserve currency, that, too, will be bought for dollars."
   The Business Week article concluded soberly by adding: "Unless the European challenge is met by radical changes in U.S. fiscal and monetary policies, the long-term effect on the dollar will be to send it the way of sterling."
   Thus, instead of halting the decline of the dollar — one of the official reasons for launching the ECU — a new, stable, much desired European currency, heavily backed by gold (which is steadily increasing in value) and deutsche marks could send the dollar reeling to unheard of depths!
   It makes one wonder what happened to those monetary experts in the United States who thought that gold was simply a "barbaric relic," a leftover from the Middle Ages, and who advocated periodic sales of the U.S. gold supply to demonstrate "confidence" in the dollar. Nearly all the gold from these sales, incidentally, has ended up in the vaults of Europe's central banks.
   These banks now hold in reserve half of all the world's monetary gold — 18,000 of the 36,000 metric tons. Only 9,000 metric tons remain in U.S. Treasury hands.

Britain at the Crossroads

   It is not only the United States which is being forced to look down the barrel of a loaded economic gun. The sudden swelling support for a European Monetary Union has clearly come at a bad time for Britain as well. Public support for the Common Market has dropped to its lowest level ever in Britain.
   Many experts feel that the monetary plan represents an unacceptable compromise of prized British sovereignty. Yet not to join could be the death knell of Britain's economy. Reported the Daily Telegraph of July 24,1978: "The issue is of the gravest importance. A decision to join would mean Britain giving up much of her economic independence from Europe.... But to stay out could mean condemning the country to second-class political and economic status in Europe in the foreseeable future."
   Which way will Britain turn? Perhaps one indication was given earlier this year when British Foreign Minister Sir David Owen, in a speech noted for its surprisingly uncompromising tone, declared that a fully federated Europe was an unrealistic goal for the foreseeable future. In his speech he made it unmistakably clear that Britain still has national interests uppermost in mind. He condemned "full-fledged federalism" as "unrealistic and to some extent mythical."
   Other British officials on other occasions have cautioned that tighter links with Europe — such as tying into the proposed joint currency fl oat against the dollar — could damage Britain's "special relationship" with the United States.

A Continental, Catholic "Empire"

   Though Britain may decide to opt out of the monetary alignment, the Republic of Ireland, on the other hand, is very interested in it. The Irish have been consistently more pro-Common Market than the British.
   Should Britain refuse to cooperate in the new monetary arrangement, the alternatives facing Ireland would be to withdraw as well or to break the parity link with sterling and tie in with the stronger European currencies.
   "In such circumstances," reports London's Financial Times of July 14, 1978, "the temptation would be for Ireland to break the link. The Republic tends to see its historic destiny as moving closer to Europe and away from Britain.
   "There could be practical advantages as well as the boost to national prestige and pride. [And] with the European reserve of 50,000m [50 billion] dollars to protect its currency, the Irish pound might rise higher than sterling."
   Thus, before too long we could see a whole new Europe arise, one primarily continental and Roman Catholic in character, revolving around Germany and France as its economic base, with Protestant Britain and possibly also Denmark (where public interest in the Common Market is also waning) on the outside looking in. It is noteworthy that Catholic Spain and Portugal, as well as Orthodox Greece, are making steady progress in their efforts to link up with the European Community.
   Into this equation, of course, one
The dollar — and the United States as a world power — are on the way down and out. The end-time events prophesied in the book of Revelation are rushing in on an unsuspecting world.
must now also add the future policies to be enacted by the new pope, John Paul I.
   There are presently nine members of the Common Market. If, as expected, Spain, Portugal and Greece link up, the membership would be increased to twelve. But if, in addition, recalcitrant members Britain and Denmark opt out, the Community would be left with ten member states.

End-Time Roman System

   The pages of The Plain Truth magazine have warned continuously of the emergence of a last, end-time revival of the Roman Empire — a union of ten kings dominated by a giant religious system (Rev. 17:3, 12-13).
   This system is pictured in the Bible as having great economic power, with its tentacles stretching throughout the whole earth. Notice Revelation 18:3: "... the merchants of the earth are waxed rich through the abundance of her delicacies." She will eventually become so huge that when she finally reaches her end, merchants around the world will "weep and mourn" (verses 11-15).
   In the Old Testament, the twenty-seventh chapter of the book of Ezekiel describes this same system, referring in symbol to the trading power of the ancient city-state of Tyre.
   It is also interesting that the system that will emerge eventually in Europe is called "the beast" and that this "beast" will have a "mark," without which no one can buy or sell (Rev. 13:17).
   While the so-called "mark of the beast" has primarily a religious connotation, it is worth noting that the German mark will be the kingpin currency behind a new European monetary system that is destined to finance much of world trade, and that international commerce may literally be impossible without access to and use of this "mark."
   In this light, consider also this quote from the Wall Street Journal of July 12, 1978 : "While exact rules [for the monetary union] are yet to be drafted by European finance ministers and Common Market aides for a political decision in December, planners emphasize that the influence of discipline-conscious West Germany can be counted on to prevent reckless creation of reserve money. 'This will be a powerful beast, but a highly controlled beast,' says one planner."
   Time is indeed short. The dollar — and the United States as a world power — are on the way down and out. The end-time events prophesied in the book of Revelation are rushing in on an unsuspecting world. (Read our free booklet The The Book of Revelation Unveiled at Last so you will not be caught off guard!)
   Prophecy races on!

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Plain Truth MagazineOctober-November 1978Vol XLIII, No.9ISSN 0032-0420
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