. March 16, 2008 SouthAmerica: Just a Reminder: The US dollar and the biggest default in historyâ¦. The Economist Special Report dated December 4, 2004 said: âIf the dollar falls by another 30 percent as some predict, it would amount to the biggest default in history: not a conventional default on debt service, but default by stealth, wiping trillions off the value of foreigners' dollar assets.â The US dollar was trading around US$ 1.30 to euro 1.00 when that article was published in December 2004, since then the US dollar has declined another 21 percent and still is heading South. By the way, if you did not read the Financial Times (UK) dated March 14, 2008 â they published a front page article âDollar falls to record lowâ â and the article said: ââ¦The euro moved to record highs above $ 1.56 â at which point Goldman Sacks estimated that the eurozone had overtaken the US as the worldâs biggest economy measure by market exchange ratesâ¦â ********* Euro 1.00 = US$ xxx 25 Nov 2004 = 1.3213 24 Nov 2004 = 1.3146 23 Nov 2004 = 1.3089 22 Nov 2004 = 1.3033 19 Nov 2004 = 1.3020 18 Nov 2004 = 1.3024 17 Nov 2004 = 1.3026 16 Nov 2004 = 1.2971 15 Nov 2004 = 1.2955 12 Nov 2004 = 1.2921 Source: European Central Bank Here is the closing rate for the euro on a daily basis - and the euro trading range when the author wrote this special article for The Economist â article published on December 4, 2004. **** The Economist had a Special Report regarding the US dollar on its December 4, 2004 issue - "The disappearing dollar." (Pg 9) Quoting from that article: â¦America's challenge is not just to reduce its current-account deficit to a level which foreigners are happy to finance by buying more dollar assets, but also to persuade existing foreign creditors to hang on to their vast stock of dollar assets, estimated at almost $ 11 trillion. A fall in the dollar sufficient to close the current-account deficit might destroy its safe-haven status. If the dollar falls by another 30 percent as some predict, it would amount to the biggest default in history: not a conventional default on debt service, but default by stealth, wiping trillions off the value of foreigners' dollar assets. The dollar's loss of reserve-currency status would lead America's creditors to start cashing those checks - and what an awful lot of checks there are to cash. As that process gathered pace, the dollar could tumble further and further. American bond yields (long-term interest rates) would soar, quite likely causing a deep recession. Americans who favour a weak dollar should be careful what they wish for. Cutting the budget deficit looks cheap at the price. .