The euro hit a fresh record high 1.3927 dollars Thursday on expectations of a US rate cut next week, while some economists forecast the single currency could top 1.40 dollars very soon.

The European single currency had Wednesday risen above 1.39 dollars for the first time since its creation in 1999, amid persistent fears over the United States economy -- in contrast to the brighter eurozone outlook.

The Feds are now in the hard spot I predicted at the start of the year. They need to cut interest rates to stimulate the US market and prop up home lenders. But if they do that people will begin pulling their money out of the US even faster. Considering the imbalance between what we import and what we export, the falling dollar has a nasty impact on the US economy.

It probably won't collapse as long as China continues to prop up the US. But how long they will or can is open to question. And there will be a price for the US becoming dependent on China to survive.