"We've entered the Global Ice Age," my friend and currency-fund manager Jack Crooks told me over the weekend.

I've known Jack for 15 years. We worked 15 feet away from each other for over a year. I learned a lot from him about currencies – his specialty. And I always respected his integrity, which he puts above everything else... 

He's a true contrarian investor. Last July, I attended a speech he gave. The title was "The Euro Could Soon Be History." Going against every trader in the world it seemed, he said the dollar was about to soar and the euro was about to crash. 

He got it exactly right. Back then, the euro was at 1.59 to the dollar. Today it's at 1.31, an 18% drop. That's a huge move for a major currency.

I caught up with Jack over the weekend in St. Petersburg to see how he feels about the dollar and the euro now. I asked him to expand on his "Global Ice Age" idea... and explain how we can profit from it in the currency markets...

Steve: Jack, what do you mean by a Global Ice Age? 

Jack: In short, "the way it was" is not coming back right now. Consumer demand has disappeared. The regulatory environment has changed. The sentiment of people just going out and borrowing in general has gone. Debts will to continue to get written down. People will spend less. That should lead to slow economic growth for years.

S: What about the idea of China's growth saving the global economy?

J: Everybody is still hoping China's stimulus will work. Look at the numbers... like exports to China from Singapore and Korea. The numbers show China isn't really growing. The idea that China could grow 6%-8% is fantasy.

China will disappoint in a big way. That takes away the last hope of worldwide consumer demand that people have. We're not saying "China's done." We're saying that, cyclically, it could be rocky for a couple years.

If China disappoints, the commodity index could fall 30% from here... back to 2002 levels. Commodity-related currencies (like Australia and Canada) will go right with it.

And if China weakens, we're going to see another upward move in the dollar.

S: But Jack, most people think the dollar is garbage...

J: We take a contrarian view. We'll get nervous when everyone loves the dollar. In our view, since people still don't like the dollar, there are a lot more potential buyers of dollars left out there.

In this whole global morass, the relative winner is the U.S. Here's why:

The U.S. still has the deepest capital markets. It's still the world's reserve currency, so money will flow into dollars. It also has the strongest consumer, relatively speaking. So we think the U.S. dollar is the relative winner over time.

S: What about Europe?

J: The euro-zone banking system is in tremendously worse shape than the U.S. The euro-zone banking system is heavily exposed to Eastern European countries, which are struggling.

Assuming the European stimulus doesn't work, which we don't think it will, you'll see a major debt default from Eastern Europe. Also, roughly three-quarters of loans to third-world countries come from euro-zone countries.

In short, the euro will fall. It could reach 1-to-1 with the dollar.

S: Can you sum up your global view?

J: We've entered the Global Ice Age... The end of U.S. consumers buying for now means the end of the Asian export model for growth.

This will be a wrenching adjustment for Asia, as it tries to switch from exports to a consumer-driven economy. The U.S. will have an easier time. It already has a relatively strong consumer market. And it's not export dependent.

In a world of tough times, the U.S. should be the relative winner... and so should the U.S. dollar.

Jack's favorite long-term trade is to go "long" the dollar and "short" the Japanese yen. He says the fundamentals are finally starting to catch up in Japan... The economy is shrinking and exports are falling dramatically.

It's typical for Jack to make an unpopular, contrarian bet. His bet today is that the U.S. dollar will be the top-performing currency of the next few years... 

While you might not like the U.S. dollar, you shouldn't ignore Jack Crooks... In 15 years, I've learned it's not smart to bet against him.

Good investing,

Steve

P.S. If you're interested in learning more about Jack Crooks and trading currencies, visit www.blackswantrading.com. I suggest signing up for his free daily currency newsletter, Currency Currents, to see if the currency world is interesting to you...