>Both of these articles discuss the recent rise in oil prices. It is >worth noting that this rise in oil prices is not likely to be >reversed, at least in its entirety, because part of it is >attributable to the fall in the dollar. Over the last two years, the >dollar has fallen by approximately 10 percent against a >trade-weighted basket of currencies. This means that if oil stayed at >approximately the same price against most other goods, it will have >risen by 10 percent measured in dollars. > >This is actually an important fact that deserves more attention than >it has received. This rise in oil prices, in a context of extremely >slow nominal wage growth, will lead to a drop in real wages. The 0.5 >percent rise in consumer prices in January was considerably faster >than the 0.2 percent increase in the average hourly wage reported for >the month.
We read the articles last year speculating that a part of the behind-the-scenes concerns were how Oil would be denominated. If there was a shift toward denomination in Euros then supposedly the US was very much against this because it would cream the dollar, supposedly. We haven't seen that shift to Euros, but keeping Oil and the Dollar linked has not prevented some slide for the dollar in the face of what seems like the most profligate borrowing Administration in history. I say "seems like" because I'm not sure if Bush II/Cheney is a worse deficit spender than Bush I or Reagan, when adjusting for inflation. But he's got to be close. It's been my view that this profligate borrowing is ultimately linked to some devaluation of the dollar, in the sense that the debts have to be repaid at some point to those borrowed-from (American Consumers, Corporations or Foreign Bodies... whatever), and that ultimately while this may mean some direct taxes to pay this debt, it may also mean what I regard as a different form of taxation, which is to devalue the debt one is owed so it can be paid more easily by the debtor. So, whatever objective measure the dollar is desperately sort of still linked to if at all (other currencies, precious metals, fuel, whatever), the currency will likely be somewhat devalued as an indirect tax measure (in this odd way of seeing things). I also note that it's been sort of weird to watch the Government's Budget Deficit and the Nation's Trade Deficit, as they really seem to mirror each other in almost exact amounts. About half a trillion each, over the last year. (A Trillion Here, and a Trillion There, and pretty soon you're talking about real money... unless it gets devalued). As to the Trade Deficit, I'm not sure I see the devaluation of the dollar vs. other currencies as being at all bad. Let American Consumers and businesses stop this partly-debt-financed shopping spree. We should not just go sending IOUs overseas forever and ever and ever. ------------------------ Yahoo! Groups Sponsor ---------------------~--> Buy Ink Cartridges or Refill Kits for your HP, Epson, Canon or Lexmark Printer at MyInks.com. Free s/h on orders $50 or more to the US & Canada. http://www.c1tracking.com/l.asp?cid=5511 http://us.click.yahoo.com/mOAaAA/3exGAA/qnsNAA/FGYolB/TM ---------------------------------------------------------------------~-> Biofuel at Journey to Forever: http://journeytoforever.org/biofuel.html Biofuels list archives: http://infoarchive.net/sgroup/biofuel/ Please do NOT send Unsubscribe messages to the list address. To unsubscribe, send an email to: [EMAIL PROTECTED] Yahoo! Groups Links <*> To visit your group on the web, go to: http://groups.yahoo.com/group/biofuel/ <*> To unsubscribe from this group, send an email to: [EMAIL PROTECTED] <*> Your use of Yahoo! Groups is subject to: http://docs.yahoo.com/info/terms/
