King Dollar

We're talkin' 'bout the dollar bill
Now what are we all to do
--Simply Red

Two months back we noted the strength is the US dollar. Since then, the USD has continued higher. It is almost 25% higher than a year ago and at levels not seen in over 10 years.

This is purely a 'cross rate' phenomenon. In a fiat currency world, there is nothing intrinsically valuable about the USD. It is just a piece of paper, and the Fed has been creating trillion$ of them.

But other central banks are printing too. And in this leveraged world it appears that the USD is perceived as today's 'hot money' relative to other pieces of paper.

As noted previously, it is only a matter of time before US multinationals start complaining about the strong dollars negative effect on exports. They will soon be approaching Washington with hat in hand lobbying for some good old fashioned beggar-thy-neighbor currency weakening.