The US and China are showing early signs of recovery helping spur a wave of fresh risk assumption. Just two months ago markets were looking into an abyss where banks were assumed to be insolvent, real estate markets were imploding and consumers were hunkered down like they haven’t been in a generation.

Two months on, banks seem to be wounded but they appear to be off life-support and taking nourishment from a steep yield curve, borrowing short near zero and lending long to dopes like me at 12% on my Visa card. Real estate is benefiting from historically low interest rates and incentives for first time buyers as well as other government interventions. All of this is good news and suggests the worst is past.

So for the sake of argument, let’s assume we see a recovery late this year or early next year. What kind of recovery will it be? Long-time readers know I stand in awe of the US economy’s ability to take blow after blow( Asian crisis, dotcom bubble, 9/11…) only to rebound further and faster than most forecasters thought. This time, I fear things will be different, owing to extraordinarly government interventions.

Throughout the post-cold war era, the US economy has grown about 40% faster on an annual basis that the European economy, my proxy for big, intrusive government. Europeans were content to pay the price of slower growth in exchange for a deep, cushy safety net. The more entrepreneurial US economy was formerly willing to work without much of a net at all in exchange for conditions that fostered faster growth. In the last 100 days, give or take, the US has become far more “European”, favoring labor over creditors, for instance, in the auto bailout and staking out a larger role in the health care sector.

The playing field is much different coming out of this recession than it was going in. We can infer from past experience that mature economies with greater government intervention grow slower than those without.

Ultimately, this may undercut the dollar, in my view. The dip in the dollar won’t merely be a “normalization” after the deflationary rush into dollars last fall and winter. It will be because of the realization that the dynamism of the US economy will have been sapped.

I am not one of those “the dollar is going to zero” nuts, or a seer of hyper-inflation. I merely see a slower growing US down the road.