The article kind of dances around the cause. It suggests that the war might have something to do with it. Then it pivots to the ECB being "behind the curve" on

The article kind of dances around the cause. It suggests that the war might have something to do with it. Then it pivots to the ECB being "behind the curve" on raising interest rates in the face of sky-high inflation. The higher bond yields in the US must be drawing capital out of the euro and into the dollar. Maybe there's some safe haven buying. Unfortunately, this article is representative of the kind of aimless search for an answer to the simple question of how the US dollar can be surging like this at a time of domestic inflation the likes of which haven't been seen in four decades and gargantuan budget deficits. What the article does not mention is US dollar-denominated debt taken out by foreign entities. As the dollar rises, these entities must scramble to find the dollars to service the debt, driving the dollar still higher and so on. This seems like a strange thing to do (borrow in someone else's currency, specifically US dollars), but it is very, very common. If this dynamic sounds familiar, it's because it's called a "short squeeze." Those foreign borrowers have shorted the US dollar by borrowing and then immediately spending the proceeds. If the dollar falls, the borrowers make out like bandits (sell high, buy low). But when the dollar rises, they come under pressure and must cough up assets to sell to buy... more US dollars (sell low, buy high). In today's world dollar strength is a sign of a distressed world economy. Selling assets to buy US currency to service debts is not sustainable. So the long-term picture for the US is not rosy, even less so for the rest of the world. A lot of debts will be defaulted on because the squeeze squashes borrowers like bugs. In the intermediate term, however, the dynamic of a rising dollar and distressed world economy can work very much to the benefit of the US. The stock and bond markets can soar as capital floods into US markets, driven by the far higher return potential compared to the rest of the world. This in turn can severely distort the economic picture, causing catastrophic policy mistakes and private mis-readings of the economic picture.