Right Thinking From The Left Coast
"To what purpose are powers limited, and to what purpose is that limitation committed to writing,
if these limits may, at any time, be passed by those intended to be restrained?"
-- Chief Justice John Marshall, Marbury v. Madison, 1803

Wednesday, June 25, 2008

Dollars For Doughnuts
by Hal_10000

In reading a rather opaque article about oil speculation, I was struck by this passage:

For example, if the greenback had held its January 2001 value against the euro, oil would have traded at about $76 a barrel in May 2008. This is almost $50 below the price that crude oil was trading at in May 2008. Accordingly, the decline of the dollar’s value accounted for a whopping 51% of the $97 a barrel increase in the price of oil from May 2003-2008.

When I first went to Australia in 2002, the Aussie dollar was worth $0.60.  This time, I actually saw someone trading it one-to-one.  My knowledge of economics is not good enough to know why the dollar has fallen so far.  I’ve read plenty of articles on it and understood just enough to realize no one else knows either.  Well, a lot of them know it’s Bush’s fault, even if it isn’t.  The only consistent thread is that our budget deficit is a factor.  So ... I guess you can blame it on Bush, after all.  At least part of it.

Long term, the dollar’s fall should be self-correcting.  A lower dollar should mean more investment in America (or not; investment in the US has cratered since SOX was passed).  But right now, it’s hurting us, especially at the gas pump.  And no one’s talking about it.  They’d rather bash evil oil execs or speculators (which even Krugman thinks is bullshit).

I’d just like to see some press flunkie ask both candidates, “What are you going to do about the dollar?” And I’d like it even better if someone had a coherent answer.

Posted by Hal_10000 on 06/25/08 at 08:33 PM in Politics, Law, & Economics  • (8) Comments • (0) Trackbacks • Permalink • Discuss this in the forums
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