Dollar Bubble Update

As many of you (well, the 14 or so of you who read regularly, anyway) know, I've been writing about the dollar bubble for several months. My theory is that the value of the dollar itself is a bubble like the housing bubble and the tech bubble. Like all bubbles, this one will pop or be deflated, and it will be ugly indeed. Imagine a world where everything cost a lot more. "Wages would rise," you might say, to which I can only respond, "What wages?" If you think a lot of people are out of work now, just wait until the money is toilet paper.

Today's update on the dollar bubble: Oil is up to $68 a barrel on the weakening dollar. That's going to seem very cheap in a few months. Everyone will blame the traders for pumping up the price, but it won't be a grand conspiracy, just basic economics, the most simple law: Supply and demand.

There are too many dollars in the world. That may sound strange to a lot of you who can't seem to get your hands on any, but it's true. The only good thing about the financial crisis would have been that it obliterated so many dollars. Then the government turned around and printed a trillion more of the things. The stimulus package pumped $350 billion more on top of that. But what do we see? It's not driving a lot of economic activity. Businesses are still closing left and right. States and cities are bankrupt. Where did all that money go? It's starting to look pretty worthless. You see now? My, what smart readers I have!

So be ready. Word of the day: Tools.