The Dollar

Reader John Thompson points to a post at The Agonist discussing the fact that the Saudis, for the first time, are not cutting rates in lock step with the US. Put another way… this is what you expect to see when the Saudis are preparing to break the peg between their currency and the US dollar. (Which, incidentally, means oil would probably not be priced in dollars much longer either.)

The Agonist then goes on to suggest that the right thing for Bernanke to do, right now, is raise rates, not lower them. Anyway, its a post worth reading.

I would only add… there’s nothing magical about the US dollar. There used to be another de facto world currency – the pound sterling. There was much pain in Britain for a long time after the pound sterling fell from grace. Part of that caused by the fall from grace, part caused by the factors that led to that fall. And as I said, there’s nothing magical about the US dollar.