ONLY ONE SAFE HAVEN:

[T]he rising greenback attracts foreign investment, which promotes domestic economic growth and a stronger currency. The appreciating dollar and stability of the U.S. continue to attract wealthy foreigners to real-estate markets in New York City and elsewhere, even with the prospect of very low returns.  

A climbing dollar encourages investment by foreigners in U.S. assets because of the currency gains on top of U.S. domestic appreciation and income. Also, the foreign money flowing into Treasuries, with their safe-haven appeal rivaling that of the dollar, helps keep interest rates low, to the advantage of the U.S. economy.  

To be sure, all of this assumes that U.S. real-estate and portfolio investments are otherwise attractive. A rising currency in the midst of a major bear market isn't likely to attract many foreign equity buyers. 

Of course, the climbing greenback opens the possibility of profits in currency trading. Portfolios I manage are long the dollar against the deliberately devalued euro and yen, as well as British sterling and the commodity currencies in Canada, Australia and New Zealand.

The dollar has been the primary trading and reserve currency since World War II and is likely to remain so for decades. Rapid growth in the economy and per-capita output weigh in the dollar's favor. American financial markets are broad, deep and transparent, as is the economy. Despite the dollar's decline since 1985, its credibility is substantial.  And there is no real substitute for the dollar as a global currency. 

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