Wednesday, August 25, 2010

Hussman on QE and USD collapse

Hussman Funds - Weekly Market Comment: Why Quantitative Easing is Likely to Trigger a Collapse of the U.S. Dollar - August 23, 2010

A few quick points:

1) Versus the euro, the dollar is already undervalued PPP-wise.

2) 10 year Treasurys currently yield more than the euro benchmark (Bunds).

3) Hussman's argument completely ignores the potential for quantitative easing by other central banks (such as the ECB).

For all the high-brow theory in Hussman's piece, he still commits the fallacy typical of vulgar dollar bears, which is to only look on one side of the equation.