The same question has occurred to me. In 1971-3 the U.S. assented to an increase in the price of oil at a time when steep dollar devaluation was underway. Wouldn't it make sense for the administration to welcome an oil price increase now, if not too severe, in order to head off a premature rise in interest rates? -- That aside, the relationship between oil and the value of the dollar is one that bears upon one of the possible motives for the invasion of Iraq. In 2001 Saddam Hussein expressed an intention to sell dollars for Euros, in violation of OPEC policy since 1975. I should think that the world's superpower running huge trade deficits would not tolerate this deviation.
At 10:39 PM 10/22/2004, you wrote:
In the past the dollar greatly benefited in terms of its international value when oil rose in price. We are seeing record highs in the dollar cost of oil and yet it does not seem like this is doing much to strengthn the dollar on international markets. Is it just that the U.S. also imports so much oil and more basic fundamentals are so much weaker than in the past?
Marty Hart-Landsberg
Department of Philosophy - Dickens 201 - Kansas State University - Manhattan, KS 66506 Phone/Voicemail: 785-532-0359; Philosophy Department: 785-532-6758; Fax: 785-532-3522
