Stopping the dollar slide

Discussion in 'Trading' started by ronblack, Jul 23, 2007.

  1. ronblack


  2. piezoe


    Very roughly, the increase in oil prices seen in the US is 30% due to a slide in the dollar and roughly 70% due to a combination of increase in demand coupled with speculation in oil futures which has resulted in current production being stored rather than sold.

    I would agree that that portion of the oil price that is attributable to demand and speculation has been inflationary with respect to energy, but not necessarily with respect to the entire economy, because had the money supply not expanded concomitantly with energy price pressure, a constant dollar supply would have been expected to be deflationary elsewhere in the economy; thus offsetting inflation in the energy sector. It was the expansion of the money supply driven by our decision to monetarize the debt, rather than pay through increased productivity or taxation, that was the primary force behind the generalized inflation we have seen and the slide in the dollar.