International markets are viewing the Federal Reserve’s decision this week to cut the federal funds benchmark rate by 50 basis points – or half a percentage point – as a sign that the Federal Reserve has abandoned the dollar to protect the stock market.

And movements in international currency markets are giving warning signs that the dollar could collapse as a result.

Consider the mounting evidence of the dollar’s imminent collapse following the Fed rate cut:

  • The dollar closed Thursday at 78.61 on the US Dollar Index, having crashed through the previous technical support level of 80 on the $US index. Analysts believe the next technical support level for the dollar on the index may be in the low 70s.

  • According to Bloomberg, the dollar has lost 6.2 percent this year alone against the euro, with the euro closing at historical highs at above $1.40 against the dollar, for the first time since the euro was created in 1999.

  • Bloomberg also reports the U.S. dollar is trading at a value equal to the Canadian dollar for the first time since Nov. 25, 1976, three decades ago when Pierre Trudeau was Canadian prime minister.

  • The Telegraph in the U.K. is reporting Saudi Arabia has refused for the first time to cut rates in tandem with the Federal Reserve, “signaling that the oil-rich Gulf kingdom is preparing to break the dollar currency peg in a move that risks setting off a stampede out of the dollar across the Middle East.”

China, with $1.3 trillion in foreign exchange reserves as a result of the massive and growing $260 billion U.S. trade deficit, has taken huge losses with the falling dollar, given that some 80 percent of China’s $1.3 trillion in foreign reserves is held in U.S. dollar assets, largely in U.S. treasury securities.

In August, China threatened to exert the “nuclear option,” a massive dollar sell-off to retaliate against signals the U.S. Congress was contemplating new regulations in response to poisoned food products and toys tainted with lead paint that have been delivered to the United States.

WND has reported the Federal Reserve is in a dilemma.

The stock market has demanded rate cuts, wanting to return to the free credit policies of Federal Reserve Chairman Greenspan that fueled the liquidity bubble that has boosted home prices and pumped the Dow Jones Industrial Average (DJIA) since 9/11.

Yet, the Fed giving in to stock market demands and lowering rates threatens an international dollar sell-off that could lead to a dollar collapse.

Greenspan also has sparked controversy by suggesting in his recently published book, “The Age of Turbulence,” the euro is rivaling the dollar as the international foreign exchange reserve currency of choice.

Writing for the Center for Research on Globalism in Montreal, Canada, Mike Whitney, a critic of the Bush economic policies, notes, “In 2000, when Bush took office gold was $273 per ounce, oil was $22 per barrel and the euro was worth $.87 per dollar. Currently, gold is over $700 per ounce, oil is over $80 per barrel, and the euro is nearly $1.40 per dollar.”

The Wall Street Journal yesterday quoted a rule of thumb advanced by Harvard University economist Kenneth Rogoff, a former chief economist for the International Monetary Fund.

According to Rogoff’s “back-of-the-envelope” calculation, a 20 percent drop in the dollar’s exchange value reduces Americans’ income by 3 percent, adjusted by inflation.

Other globalists concerned about the a tightening of U.S. “free trade” policies because of adverse impact on the U.S. market write in the Council on Foreign Relations July/August issue of Foreign Affairs magazine that 96.6 percent of all U.S. workers, including college and technically educated U.S. workers, have lost mean real wages since President Bush took office in 2000.

The only winners, according to the article written by political scientist Kenneth Scheve and economist Matthew Slaughter, are the under chief executive officers, lawyers, accountants and MBAs who form a corporate elite running or advising large U.S. multi-national corporations.

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