Thanks Bush: Say Hello to Inflation

[Dinner]

Originally posted by Kidicious
Oerdin,

Sure. What do you think the causes of 1 and 2 are?

I'd say the weakness of the dollar is caused by the trade gap and the budget deficit while the rise in energy prices is because the world's consumption continues to rise faster then supply.

There for policy decisions which limit trade deficits and force politicians to balance the budget would solve problem one and combination of cutting demand (via higher CAFE, more mass transit, and higher gas taxes) and allowing more production (ANWAR and coastal drilling) will help problem two.

[Agathon]

Who would have thought that the President would be able to attack another country without a shred of evidence and that radical conservatives who do not represent mainstream thinking in America would get their own way.

I think any Republican looking at the religious turnout would see that pandering to this constituency can't do them any harm.

[Ned]

Originally posted by Kidicious


They don't use more dollars to buy oil because there are more dollars. The supply of dollars has not effect on this. When they buy US securities the dollars return the same way they do when they buy US goods.

I'm not so sure that the supply of dollars has nothing to do with oil. When more dollars are in the hands of people who need to buy oil, the both the price and consumption of oil may go up. This of course may affect the price of oil in the United States and directly affect inflation.

[Kidlicious]

The price is likely to go up because the value of the dollars recieved for oil will become less, but consumption decreases with increase in price. That's the law of demand. People's incomes aren't going up. It stays the same, because the dollars are worth less.