The consequences will be very different whether you live in the Euro zone, in the Dollar zone, or outside both. In any case, 1 EUR = 1,50USD will drastically modify the certainties which led your behaviour or political position. That will indeed represent a 30% fall of the value of the Dollar compared to the Euro in approximately 6 months.

If you are in the euro zone:
The exporting sectors towards the Dollar zone will very quickly and directly suffer from this situation. For example, a German car exported to the US, will see its price rise by 30%, unless the manufacturer decides to reduce his profit margin. Exporters suffering from a sudden devaluation of their client’s currency often react in that way in order to preserve their market share. However, the margin of exporting industries is at the most 10% to 15%. Therefore they cannot absorb the entire rise of the price of their product in the dollar-zone, unless they sell at a loss, thus running the risk to be accused of « dumping ». In consequence, the German car (or the French « foie gras ») will see its price rise significantly in the US and most probably its sales diminish strongly. If you own shares of European companies strongly depending on their exports towards the US market, be very careful! You might be badly surprised. If you are in charge of such a company, and if it is still time for you to do it, cut your production costs as soon as you can, or even better, increase your exports to the euro zone our outside the dollar zone.
On the contrary, US products will become very cheap, as much as investing or spending a vacation there. But be careful however! As explained in a previous part of the present Bulletin, other internal factors in the US, resulting from the global systemic crisis, will counterbalance the good news.

If you are in the dollar zone:
If you buy US products only, or if you operate on dollar-indexed currencies, there is no problem; you will not feel the difference. Not directly anyway, as in fact you must be an exception! Indeed, given the immense US trade deficit, most US consumers buy imported products (oil, for instance). Therefore even if you are not personally involved, your family, your friends, your colleagues, your employers…, will be; and soon after you will be too, knowing the impact will be strong. Indeed, as we can see already with a euro worth 1.30 USD, it is not the euro that rises, but the dollar that falls, today against the Canadian dollar, the Japanese Yen, and tomorrow against the Chinese Yuan.

In fact, the cost of living will altogether increase by 30% in the US, because nearly all the currencies used by foreign exporters will rise by 30% against the dollar, provoking a very strong imported inflation and a proportionate rise of interest rates (in an attempt to reduce the inflation and the fall of the dollar). Rising interest rates will result in weighing down credit charges of in US consumers debts, and will trigger a significant impoverishment of the US society: currency collapse + inflation and rates rise will altogether decrease US purchasing power by 50%. If you are a US citizen, get rid of your debt as fast as you can, switch your dollars into euros, yens or precious metals, and disengage from all investments depending on US household consumption. If you are not a US citizen, but if you sell products in dollars, you must chose between « staying in dollar, but increasing by 30% at least your prices » or « starting to sell your products in other currencies, including the euro for sure ». By the way, that’s what oil-producers are getting ready to do.

If you are outside both:
European products’ prices should not chance much for you. On the contrary, American equivalent products will suddenly appear very cheap in comparison. If your activity or your investments directly depend on exports to the US, disengage from them quick or re-direct your activity towards other economic areas: US consumers will buy less and less, as they will be poorer and your products will appear to them more expensive.

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