Oil and Dollars - You get the policies you deserve!
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Click Here to read about Dollars and Oil
"The lower value of the dollar has a number of important ramifications. First, crude oil prices go up. Because crude oil pricing is based on the U.S. dollar, everyone who produces or trades in oil must raise the price in order to compensate for the lower value of the currency. Because oil prices fluctuate more rapidly than the value of the dollar, oil companies tend to realized even higher profits on these fluctuations.
In addition to oil, U.S. exports are also cheaper when the dollar's value goes down. About a quarter of the sales of companies in the Standard & Poor's 500 stock index come from their foreign sales. Companies do not have to raise their export levels. They simply make more money selling the same goods. In essence, the American consumer pays for these higher corporate profits by paying more for imports.
AND NOW THE KICKER: Foreign governments know exactly what the Bush Administration is up to. In the past U.S. monetary policy has been subtle and incremental. The Bush Administration has forced a rapid devaluation of the dollar, cutting nearly 20% of its value in a year. Most significantly, the administration has done little to conceal its policy.
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