Here is my understanding why the US dollar is strong recently.

A secret offshore company called "ABC Offshore Ltd" can place bets on financial vehicles defaulting and get "insurance on the failure", and the only thing the desk manager knows is that when the insured party defaults, the payment gets transferred to a numbered account, which is also secret.

To open an account through the British Virgin Islands (BVI) financial services Commission, one only needs to wire 500 bucks a year to the registrar to keep a "good standing" and $1,500 to $3,000 to a lawyer called a "Registered Agent".

Under BVI law, the company reporting requirements are limited to the name of the company, year of incorporation, company number, and registered agent. Under law, the company's directors, shareholders, employees, financial statements, what they do, and where they do it are completely secret.

An entity may register and do business anywhere in the world, except where the company is registered. It is estimated by the Suisse that most of the 70 trillion in Credit Default Swaps originated from companies in the Caribbean.

All of these CDS agreements are PRIVATE, and they are all priced in dollars. This is why the dollar is king right now. There is less demand for hard assets and commodities, because they are not as liquid.

The reason the dollar gained 25% in three months is because other currencies are failing, and banks are off loading their hard assets at fire sale value to get short term dollars to pay off these "default bets".

They are selling quick because they couldn't see what was coming. The short sellers (buyers of CDS "insurance") are secret individuals. You could be a desk manager at Lehman and have an offshore entity placing bets on your "own" company".

The architects of subprime are based in the Caribbean, but you will never identify them. They sold banks the MBS/CDO (note: MBS is Mortgage Backed Security, CDO is Collateralized Debt Obligations, CDO is a combination of whole bunch of ABS. ABS is Assets Backed Security, such as mortgages, credit card debts, home equity loans) adjust in two years, because they invented the products.

Transparent investors saw the potential risk, but were attracted by high monthly yield spreads. CDS allows for 100 or more bets to be put on the full value of the default policy, far exceeding what the banks have in cash in case of such a default. The amount estimated this month is 12 trillion, which represents more money than Americans have in checking and savings (7 Trillion).

Its unfortunate that these banks also took the 7 trillion of your money and used it as collateral to take out loans in excess of 70 trillion so they could generate 70 trillion in loans.

This bubble is 10 times bigger than all the savings and checking accounts combined in US, I believe inflation will be 10% to 20% within a few years.