The dollar is falling faster than a 400LB man skydiving without a parachute… And the U.S. is spending more than a pothead in an Amsterdam ‘coffee shop’.That’s right, I’m a little insane to be saying it, but I wouldn’t be shocked to see the dollar rally for the next week or two. In fact, I hope it does for a little bit.

I have to be honest, there’s nothing good about a currency that’s dropping as fast as the dollar is. Over the last year it already lost over 12 percent in just the past year.

That’s a little scary, really. It’s scary because it makes foreign governments think two… sometimes three times before funding our deficits… and wars.

If the U.S. suddenly can’t sell bonds to fund it’s deficits then you know what that means? Interest rates will have to rise in order to lure those governments in.

Will rates have to go back up to five percent? My guess is probably more like eight or nine percent.

And it already seems like everyday another country decides to buy less bonds. Just the other day South Korea’s national pension fund decided not to offer U.S. bonds anymore. And can you blame them?

Interest rates are at a back-hand-my-face-two-times low… The dollar is falling faster than a 400LB man skydiving without a parachute… And the U.S. is spending more than a pothead in an Amsterdam ‘coffee shop’.

In the end, I don’t blame everyone for selling dollars. Hell, I would too.

But I have this feeling that the recent correction is a little overdone. I’m not calling an end to the dollar bear. Nowhere near it, actually. All I’m saying is that the dollar should rally a few cents before heading back down.

And once it rallies – if it could hit its 100-day moving average – Then i’m shorting with as much borrowed Yen as I can find.

Just to let you know, if you want to see a chart on the dollar just go to www.stockcharts.com and type in the symbol $USD.

This is the dollar index, which is the dollar versus six major currencies (british pound, yen, franc, etc…). If you pull up a chart, you’ll notice that the dollar loves to rally up to its 100-day moving average and then fail to break past it.

That’s been going on since at least 2006. Seems like a solid trend to me. And the U.S. isn’t showing signs of turning around yet. until it can do that, I’m bearish on the dollar.

But, my friend, once the U.S. economy starts turning around, you better buy dollars like they’re gallons of gasoline in the 70’s oil crunch.

I say that because the U.S. will jack up interest rates quick (it seems like Bernie’s style to do quick volatile interest rate movements. He is quick and dirty indeed.) Plus better growth will support the outlook for the U.S. economy. As that happens, people will once again bet on the dollar and you’ll see it rally.

Of course, the dollar trend will always be down. Fiat currencies always devalue over time. To deny that is like denying that Michael Jackson is a freak.