C6H12O6 (Mr. 'Hexose') The Euro will likely replace the dollar at some point in the not distant future as the preferred currency of international commerce. Probably the only thing preventing that so far is the U.S.'s veiled threat to drop its commitment to military protection of the Saudi's and other Arab oil producers if they allow OPEC to drop the dollar. Once the Euro replaces the dollar as the favored currency of international trade there will be tremendous benefits accruing to the EU. The same benefits that US has enjoyed all these years. Trade in dollars resulted in huge amounts of dollar denominated assets accumulating in central banks around the world. This resulted in the US being free to inflate it's fiat currency, thus cheating all the nations it has borrowed from at fixed interest rates. And the US has little to fear from central banks dumping dollars, knowing that they all stand to suffer tremendous losses if they don't support the dollar. (Of course there is a limit to how far the U.S. can go down this road, and they may already be pushing their luck.) At the moment, sovereign funds are being used in ever increasing amounts to buy U.S. hard assets as this is one of the very few ways that other nations can hedge against further dollar weakness. But in the meantime Henry Paulson smiles every time he writes a check for interest on borrowed money. If the EU should ever go back to national currencies, any hope of the Euro becoming the standard international trade currency goes down the drain! I just don't see that happening. Most likely a compromise will be reached in the EU and short term interest rates in the EU will ease some, the Euro will weaken slightly, and the dollar will strengthen slightly vs. the Euro, but a truly strong dollar is not on the horizon. Too much US debt that must be inflated away! One thing it would seem we are virtually certain to see is a reluctance among central banks to take on still more dollar denominated paper. This has the potential to become a serious problem for the US. Interest rates in the US will have to go up. But when?