Institutional investment strategists follow economic and market data closely, and tend to weave together a narrative that explains the current trend. Presently the US dollar is rising, like it has two times before in the last few decades. In this podcast, we sample the perspective of Brown Brothers Harriman currency strategist Marc Chandler, whom we believe mistakenly thinks the rising dollar is proof that the U.S. trade deficit is benign. In Part 3 of our series, “Free Trade Doesn’t Work,” Stocks-in-Depth pulls apart the numerous assumptions behind Chandler’s thesis, except one: the powerful effect of interest rate differentials on the current momentum of the dollar. Chandler will most likely be right in the short term, and he’s likely to try to make the opposite call when intervention stops the dollar’s path, as was the case in previous bull markets. But he is wary of the rise of what he dubs “populism-nationalism,” in Europe and America, for it might put the stake into the heart of free trade. For Chandler, it is a myth that the gigantic trade deficit, which has opened up since the early 1970s when the dollar was severed from its gold backing, means that the dollar is overvalued or that free trade is a failed policy. To us, that’s a straw man, for currency pairs will always ebb and flow to the rhythms of the global credit cycle and capital’s desire to cross borders for investment purposes. If the theoretical case for free trade has been falling apart since nearly the beginning of the millennium as economist Ian Fletcher contends, then further dollar strength would only ratchet up the pressure that is boiling under the surface in the form of populist-nationalist movements.