The recent rally in the US Dollar index/UUP etf may have been covering by dollar shorts as well as selling by Yen holders in anticipation of the devaluation of the yen. Now those US dollars are being used to buy U.S. goods. Mostly financial goods. Stocks and bonds. Hence the rise in the stock market and the continued strength in the bond markets; from government to junk bonds.
But as those U.S. dollars are invested in this country then they are here and will start to circulate. This is the endgame that Bernanke and the interest rate doves and stimulus crowd were after. To get some of the U.S. dollars in the world to come home to roost.
Now the U.S. dollar should start the decline as those dollars are worked into circulation in this country.
"Inflation is always and everywhere an monetary phenomenon". as Mr. Freidman famously said.
I wonder if this might be what Goldman sees coming.....
Perhaps i am too brash.