Pretty convincing.

ADDENDUM

Wikipedia:

Brooksley E. Born is an American attorney and former public official who, from August 26, 1996 to June 1, 1999, was chairperson of the Commodity Futures Trading Commission (CFTC), the federal agency which oversees the futures and commodity options markets. During her tenure on the CFTC, Brooksley Born warned Congress and the President of the need to regulate financial instruments known as over the counter (OTC) derivatives, but her warnings were disregarded. Lack of regulation ultimately led to the crash of the derivatives market, and helped trigger the economic and financial crisis in the fall of 2008.

In fact, isn’t it a good pairs trade? Sell the overvalued asset and buy the undervalued assets?

UPDATE: Steve Conover has another excellent graph and analysis on the strength of the dollar. To me, it says some additional things:

1-the limits of a gold-backed dollar, the loss over which the austrian school is always crying

2-how good a democrat president Bill Clinton and treasury secretary Robert Rubin were, and

3-how Jimmy Carter comes in dead last, yet again (Nixon was the one who pulled the trigger on Bretton Woods in the first place, and USD power has been unleashed, helping rich and poor households alike, especially in America and Mexico).

UPDATE II: Dani Rodrik is more sanguine about Bretton Woods. I don’t always see eye to eye with him, but his Trilemma Model does seem to hold up well to my skeptical scrutiny.

Cross posted from Caveat Bettor.