Why the dollar surge won’t last

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This post is a guest contribution by Paul Kedrosky*, friend and venture capitalist who also blogs about what shakes and stirs in the financial world on the Infectious Greed site.

paul-ked.jpgThat same broken dollar is now king. It won’t last. Think of it as a temporary scarcity of life jackets.

The dollar bulls are out for dollar bills. After having tumbled over the last few years while the U.S. economy grew smartly, that same broken dollar is now up 16% against the euro this year – and up more against other major currencies.

Down is up, and up is down? How is it that a growing U.S. economy was bad for the U.S. dollar, but a potentially calamitous collapse in the same U.S. economy – complete with a foreigner-bankrolled quasi-nationalization of the U.S. banking sector – has the U.S. dollar up double-digit percentages? And if bad is truly good, maybe we should nationalize the rest of the U.S. economy in a hurry while overseas investors are still digging the idea and bidding up the dollar.

There is an element of bizarro world safety here. While I wouldn’t be hanging around in four years when the bailout bills come due around the same time as the boomers start retiring.

Please click here for the rest of Paul’s article.

* Paul Kedrosky’s bio is here.

Source: The Daily Beast, October 29, 2008.


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