The small, open economies, in a semi-vassal position to the USA, permanently worried about exchange rates, have become a large, mostly self-sufficient, powerhouse, with a balanded trade and financial position, increasingly able to trade in its own currency - a currency that has not been devalued by bubbly and/or profligate monetary policies. The health of the eurozone is much less dependent on the dollar than most people think (out of habit); the ECB is running a monetary policy focused on the internal strength of the euro rather than its external value, and the resulting intrinsic value of the euro, combined with its new reach, provides an alternative to investors around the world to trade and to store wealth.

So the euro, our currency, has become a problem for US policy makers. Gorging on debt as a wealth creation, they have been free-riding on the dollar's previously unassailable role for a very long time. But now, there is an alternative, and there finally are Europeans willing to say that the emperor is naked. This is a momentous event.

Some US commentators in the WSJ realize the extent of the problem:

The Weak-Dollar Threat to World Order (...) the U.S. has much more at stake than merely undercutting the competition in global markets with cheapened dollars. The connection between price stability and entrepreneurial effort is profound. Why should anyone work hard or take risks if financial rewards can be blithely confiscated through inflation? The old communist aphorism - "They pretend to pay us and we pretend to work" - reflects deep cynicism borne of citizen subservience to totalitarian government. Honest money is the bedrock of democratic capitalism. When the U.S. turns a blind eye to the consequences of diluting the value of its monetary unit, when we abuse the privilege of supplying the global reserve currency by resorting to sleight-of-hand monetary policy to address our own economic problems - inflating our way out of the housing crisis, pushing taxpayers into higher brackets through stealth - it sends a disturbing message to the world. Why would the nation that espouses Adam Smith and the wisdom of the invisible hand permit its currency to confound the validity of price signals in the global marketplace? How can Americans champion the cause of free trade and exhort other nations to rid themselves of protectionist measures such as tariffs and subsidies - and then smugly claim that U.S. exports are becoming "more competitive" as the dollar sinks? That's not competing. It's cheating. The U.S. cannot go on pretending the dollar's fate is somehow beyond our ken. Maintaining a reliable currency is a moral responsibility as well as a strategic imperative.

Devaluation is almost always a short term fix and it has deleterious long term effects. But when you have a large enough economy with no competitor, you don't really care. That has been the privileged position of the US economy over the past 60 years, and sadly it's been abused. Conversely, Europe had the habit (not having much of a choice in the matter, and remembering the great hyper-inflation of the early 20th century) of being disciplined on the monetary side, and is now behaving, through the euro, as a big economic block. It's quite a change on the international scene.

Call it yet another US asset that has been despoiled by Bush and Greenspan.