Ever heard the expression "When the US sneezes, the world catches a cold"?

One might add
"When the US sneezes, the world catches a cold, and the US dollar loses 40% of its global purchasing power"

That was the drop in the dollar from tech bubble peak (everyone outside the US piling into the US stock bubble) to trough (around the credit crunch). The US dollar index dropped from about 121 to about 71. i.e., if you'd held a drawer full of cash in a typical other major currency during that time, you'd have made a profit of 70% measured in US dollars.

Lately there has been what looks a lot like a US large cap tech bubble with non-US investors piling in for several years, driving a strong US dollar as a result. The rest of the story this time is as yet unwritten.


And if you are a US citizen, there is absolutely nothing that you could do to avoid any such risk.

One can hold assets other than US dollar cash or cash equivalents.

For someone with confidence that neither the global financial system nor the US fund industry will melt down, I imagine the safest single-purchase asset is WIP. A collection of non-US inflation protected government bonds. Perhaps its introduction was a contrarian sign, as it launched almost precisely the moment of the long-cycle bottoming of the US dollar in 2008, yet has still managed a profit since then even as the US dollar has risen about 37% (not what you might have expected). To whatever extent one thinks the US dollar will hold up, mix in some TIPS.

A side note: I trust everybody knows that money market funds are NOT risk free--nowhere near it. They often don't even hold what the name implies, not to mention the sponsor and systemic risks. If you want the yield on T-bills, for heaven's sake buy T-bills. Conversely if you want a higher yield (which money market funds typically do not even offer), buy something with a higher yield and live with the increased risk.

Jim