Driven by the economic crisis, the idea of a common eurozone bond is finally taking shape. It could be a tool to combat the economic slowdown and simultaneously help hold the unwieldy 16-nation eurozone together. But if successful, it could also be the beginning of the end for the U.S. dollar.

The chairman of the eurozone finance ministers, Jean-Claude Junker, has proposed that a common euro bond, backed by the cumulative economies of EU member nations, should be issued to attract foreign investors and provide inexpensive borrowing for smaller nations.

As part of the plan, bonds would be issued to cover the first 40 percent of the overall eurozone government debt. “This would be senior debt, guaranteed by the whole euro area …. Anything above the 40 percent would be junior debt that would be issued by individual governments,” according to Reuters. “If agreed on, common eurozone bonds would in a matter of a few years create a highly liquid bond market of some 4 trillion euros which could successfully compete with a similar size U.S. treasuries market for large investors like China” (February 20, emphasis mine throughout).

So far, the movement has met resistance from Germany, which is afraid that its borrowing capacity would be burdened—weighed down by the other weaker European economies. One proposal currently being floated to bring the Germans on board, says Reuters, is to tilt the decision making on bond issuance “towards countries with the lowest spread on their debt”—a move that would be akin to “effectively putting Berlin in control” of how much gets borrowed and by whom (ibid.).

“Architects of [the European Monetary Union] were well aware that a one-size-fits-all monetary policy for vastly disparate nations would create serious tensions over time,” notes the Telegraph’s Ambrose Evans-Pritchard. “They gambled that this would work to their advantage. The EU would be forced to create new machinery to safeguard its investment in the euro. It would be a ‘beneficial crisis,’ bringing about the great leap forward to full union. We are about to find out if they were right.”

Evans-Pritchard says the German people have not been prepared for what is coming. What Germany would gain in international political power by supporting a European debt market would likely be offset by increased economic burdens at home.

However, the creation of a common European bond market would be a huge step forward for European integration—and a huge opportunity for German political interests to increase influence over the Continent.

But if realized, this movement will have ramifications that reach far beyond Europe. The biggest casualty could be America.

America is currently home to the biggest debt market in the world. America borrows more than a billion dollars per day to cover government spending alone. America borrows further billions each day to cover the cost of imports that exceed its exports.

Chinese, Japanese and Middle Eastern oil exporters cumulatively hold trillions of dollars worth of U.S. treasuries, and other U.S. agency debt. China alone has almost $2 trillion worth of dollar-denominated assets.

The reason a new European-wide debt market could be a big threat to the United States is because up until now, the U.S. market was the only one large enough and liquid enough to handle such large investments—even if China and other countries wished to invest more of their money elsewhere.

As Luo Ping, a director general at the China Banking Regulatory Commission, said in New York earlier this month, “Except for U.S. treasuries, what can you hold? … U.S. treasuries are the safe haven. For everyone, including China, it is the only option.”

This comment was mostly a lament. He added: “We hate you guys. Once you start issuing $1 trillion to $2 trillion … we know the dollar is going to depreciate, so we hate you guys but there is nothing much we can do.”

Luo was referring to America’s announced bailouts. He said China knew the dollar would be devalued to pay for all the spending, but China still had money to invest, and if it wanted to hold large chunks outside of its own country, it had little choice. America was still the best worst option.

Luo’s comments, which indicated that China was locked in a symbiotic relationship with America, contrasted sharply with earlier statements out of China, which indicated that China’s dollar holdings were a geopolitical weapon that could be used at will.

Either way, the days of America being the only large-scale debt market may be nearing an end.

For America, that may prove a big problem. Because China and other nations buy so much U.S. debt, it keeps interest rates low in America and it supports the dollar’s value. If China were just to stop lending new money to America—never mind dumping any of the hundreds of billions of U.S. government debt it currently owns—it could potentially trigger a dollar crisis, sending inflation and interest rates soaring.

A new euro bond market would directly compete with U.S. treasuries for the very same foreign money that keeps America functioning. And the proposal couldn’t have come at a worse time. America is attempting to finance the biggest spending binge in history. It will need to borrow up to $2 trillion over the next year to pay for its economic stimulus packages.

This may be a big part of the reason Hillary Clinton chose China for her very first overseas trip as secretary of state. According to Agence France-Presse, while in Beijing on Sunday, “Clinton urged China … to keep buying U.S. debt.”

“By continuing to support American Treasury instruments the Chinese are recognizing our interconnection,” she said. “We are truly going to rise or fall together.”

Chinese Foreign Minister Yang Jiechi indicated after the talks that China would not yet change its U.S. treasury policy.

America’s foreign debts are proving to be a major impediment both diplomatically and economically. They will prove to be a huge weight around the nation’s neck.

But this could have been avoided.

The ancient Israelites knew the danger of debt and foreign creditors. In Deuteronomy 28, they were warned by God: “The stranger that is within thee shall get up above thee very high; and thou shalt come down very low. He shall lend to thee, and thou shalt not lend to him: he shall be the head, and thou shalt be the tail.” This scripture is also a prophecy for today. For proof, read The United States and Britain In Prophecy.

It is a clear indication of how poor America has become when the very first job of our new secretary of state is to run to China and beg that it keep lending us money.