The Fed, the Dollar, and the Price of Oil

Consider this post from One Salient Oversight:

With the market in trouble, Bernanke came to rescue by lowering a key federal funds rate, a process which essentially communicated to the market that the Fed’s monetary stance is now expansionary. In other words, the Federal Reserve will increase the money supply, thus making money cheaper, with the result being an easing of conditions for the entire marketplace.

If the US Dollar devalues then the price of oil will go up accordingly. International markets have responded to the Fed’s lower rates by selling off the US Dollar – and they will continue this process. With an ever-devaluing US Dollar, the only way is up for the price of oil.

On Thursday last week I predicted that oil would not go over $100. Since then Ben Bernanke has messed up my calculations and basically said to me (and the rest of the world) that the US Dollar is not worth owning at its current price. With a devalued US Dollar now an almost certainty, the chances of oil breaking the $100 mark is now much more likely.

Well, there’s a prediction. And there’s a lot more at the post.