Dollars and Jens
Monday, December 08, 2003
commodity inflation

As it was pointed out on Rukeyeser this past weekend that oil poked its head above $31 a barrel, raising the specter of inflation, I'd like to point out that that's €26 per barrel. If inflation is sparked by price hikes in such internationally mobile commodities as oil, it should be attributed to the weakness of the dollar.

This raises the issue of the federal reserve meeting tomorrow, which I would expect not to raise interest rates yet, but at least not to mention risks of deflation without balancing that language with some kind of concern over either currency weakness in the foreign exchange market or against goods and services, i.e. inflation per se.

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