Capricious nature? Do tell. Sure, demand for trade impacts currency values. But only in so much as that currency can buy anything, to begin with? You see?
The usual. If you actually get the data and do a nitty-gritty analysis of the real correlations, you'll find what's affected (notice the 'a', please) and what isn't. Gold is, but it's not as tightly correlated as some other things are. The answer, if you bother to actually do your homework, is interesting, enlightening, and profitable. No, not giving it to you. I'll just say it ain't corn or oil or corn oil.
Krugman is actually pretty shrewd. He knows the Fed can't fight inflation AND promote job growth at the same time. Also, right now inflation (at least as measured by the Fed) is not a problem, empoyment is. Pretty soon, the Fed is going to have to pick one over the other. Krugman is just talking is book. There is no way in hell this country isn't going to see a sharp uptick in inflation. Its just a matter of time.
Argh, I hate arriving in these types of threads after two full pages have passed. What those of you arguing against cheap money (or money supply expansion) and speculation continue to ignore when you post your "well, why didn't it happen back in the 80s and 90s" sillyness is the passing of the GrammâLeachâBliley Act, which effectively repealled Glass-Steagall. This was done by three Republican co-sponsors, approved by the house and senate, then signed into law by Clinton, and effectively unleashed the big banks. Also, the advent of so many hedge funds and sov wealth funds added to the fray. Comparing the market pre-2000 to post 2000 is pointless and irrelevant. Speculation in all major commodities is as a hedge against a weakening dollar, which is nothing more than poor monetary policy (cheap money and M3 expansion). Blaming the speculators for protecting against a falling dollar is a typical uneducated, ignorant argument.
Ah, so you do understand how I feel about your economics-related posts. Splendid. <iframe width="420" height="315" src="http://www.youtube.com/embed/bwsAweTWRIs" frameborder="0" allowfullscreen></iframe>