"High-flying markets, like the late-1990s dot-com fiasco or this decade's real estate and consumer-spending spree, normally have internal mechanisms to wring out excesses. That's what free markets do. That's what contrived markets do not do. Healthy markets correct before they reach such pinnacles, rather than being continually fed with cheap money and cheerleading," said Dr. McDougal.

According to McDougal, the Fed apparently has other ideas. The same people who brought you these other two noteworthy bubbles are still hard at work at their greatest masterpiece of all -- the almighty U.S. dollar.

Dr. McDougal continues, "If the dollar is so fundamentally compromised and few are diversified outside of it, how does one go about correcting this imbalance? There are no hard currencies across the globe to escape to, as all are decreed paper. It's called an age of floating currencies, but they pretty much all sink. Some sink more than others, so you have to keep an eye on the entire playing field. Diversifying within global currencies is one approach, as some drop slower than others and you can profit on the differential."

According to McDougal, since 2002, the Canadian dollar has appreciated 40% against the U.S. dollar. That's an impressive annual rate of return of more than 8%. How do investors capture these potential gains? They can consider diversifying dollars directly into foreign currency products, though that is certainly not common practice. Exchange or currency controls will likely be put in place to accomplish two basic goals:

1. Prevent the global glut of dollars (called big float) from returning home.

2. Prevent dollars held within the U.S. from seeking safety abroad. Selling dollars and buying euros, for example, is not exactly user friendly.

The dollar will clearly need these or other such interventions to keep it from sinking to the sea floor. It is that compromised. It is that big a bubble.

Another way to achieve currency diversification is to purchase foreign-based stocks, according to Dr. McDougal, "I do like the resource-based currencies, such as those of Canada, Australia, and New Zealand. They tend to outperform in resource bull markets."

He adds, "These are some of the essential reasons why you must become more aware of the extreme pitfalls facing the buck. The dollar-based world is rapidly changing … The buck is different yesterday, today, and tomorrow. How can a hardworking and saving citizen survive such chicanery? Why save at all? Maybe that's why we don't."

For more information and to read the full article, visit Investor's Daily Edge at http://www.investorsdailyedge.com/archive/index.php

About Dr. Russell McDougal
Dr. Russell McDougal has been an active investor and stock market expert for more than 25 years, holding everything from stocks, bonds and mutual funds, to options, futures, currencies, limited partnerships, private placements and rare coins.

Since 1993, Dr. McDougal has focused almost exclusively on gold, silver and resource investing. His personal portfolio is a virtual mutual fund of natural resource exploration and development companies.

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