Could Short Squeeze Send Dollar Soaring?Is the dollar susceptible to a short squeeze?
I pursued an answer to that question years ago without reaching a definitive answer. Now, I am heartened to see that my pen-pal George Paulos and his colleague Sol Palha have written an illuminating treatise on the subject at freebuck.com that is closely similar to mine both in its logic and its speculative details. My original premise was that, in a global financial crisis, short-term lenders would not let debts roll over – that they would demand that borrowers settle up immediately in cash. Facing liquidation as an alternative, the borrowers would try desperately to get the money from somewhere. That in turn would send dollar lending rates — and therefore the relative value of the dollar — instantly skyward. This scenario poses a paradox as far as I’m concerned, since it would seem to flatly contradict something I’ve asserted here many times – that the dollar is intrinsically and fundamentally worthless. How, one might ask, could the dollar soar in value if it is not worth anything
