We've long assumed that a collapsing dollar would take the global economy with it, but perhaps we were being too pessimistic? After all, the Dollar Index has fallen by 36 percent since 2002, but life goes on. Moreover, when the greenback slipped to historical new lows on Friday, hardly anyone seems to have noticed. Or rather, if they did notice, it was deemed reason to celebrate. The Dow Industrials shot up 135 points as stocks rose across-the-board -- especially precious metal shares, which may finally be starting to reflect fears that there is nothing to prevent the dollar from slipping still lower. Perhaps much lower. Those same fears evidently are running high at the NYMEX, where crude oil quotes have been ratcheting closer to the $100 mark each time the dollar stumbles. And where does the White House stand? In an interview last week, veep Cheney hinted that the government would take a hands-off attitude toward the US currency. "We do believe in a strong dollar,' he said, 'but we think that the key is that it be allowed to adjust based on market forces out there, and that's exactly what's happening." To speak of the dollar's wholesale collapse as an 'adjustment' is like saying that the fiery collapse of the Trade Towers was an adjustment to airborne traffic. Not only has the Dollar Index slipped to historical lows in recent days, it has entered an airless void on the charts (see above) without so much as a token word of support from anyone high up in the U.S. Government. 'He Who Panics First' Incidentally, it was none other than Larry Kudlow who conducted the interview with Cheney. We have always portrayed Kudlow as a guy who would say absolutely anything to get his face in front of a TV camera.
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