Betting against U.S. dollar may be good buy
by : John Waggoner
We all have things we worry about in the middle of the night. Taxes. Blood pressure. The creature in the basement.
One thing that's kept economists and strategists up for years is the U.S. dollar. Chronic budget and trade deficits someday may sharply weaken the dollar -- which, in turn, could bring a slew of other problems. Is the dollar something you should worry about? Possibly. Fortunately, you have several ways to help shield your portfolio from a falling dollar, depending on your degree of fear.
In a way, it seems odd to worry about the dollar, which reigns as the world's preferred currency. The oil market, for example, is run largely in dollars. And in countries such as Ecuador, the greenback has replaced the national currency.
But economists worry that there are too many dollars in foreign hands, thanks to our enormous budget deficit. The United States must borrow to finance its debt. To do so, it issues Treasury securities, which are interest-bearing IOUs backed by the government.
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