If the Federal Reserve begins pulling its irons out of the stimulus fire in September, the resulting rocketing of the dollar and accompanying deflation will lead the Fed to reverse course by early 2014.
So says Jim Rickards, managing director of Tangent Capital and author of the 2011 bestseller, "Currency Wars."
Rickards, who said September tapering could spur the dollar to jump 20 percent versus the yen, added, "The bigger picture is the Fed has no good alternative."
The central dilemma: The Fed is feeling heat to ratchet down its $85 billion-a-month bond-buying program, which pressures the dollar because it is tantamount to printing money. Hawks are worried about asset bubbles and systemic risks. Growing speculation that the Fed would taper in September sent the dollar index to three-year highs early this week.