The Oil Drum

260 comments on The Specter of Recession

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dinopello on October 4, 2006 - 10:32am

This is good stuff and economics made somewhat interesting too! Love the Vonnegut article, I wish he would be giving a fireside chat every week on the tele.

Question - What, if any significance is there to the simultaneous drop in the dollar and the rise in oil? Does the fact that oil is priced in dollars mean that the price rise is not as significant to the economy?

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Darwinian on October 4, 2006 - 4:11pm

The Dollar index closed out 2003 at a tad above 85. That was just before Oil started its rise in price. Today the Dollar index stands at just above 85.

What simultaneous drop in the dollar were you talking about?

The Dollar index dropped dramatically in 2002 and 2003 while the price of oil rose only slightly. Since then the price of oil has rose dramatically while the dollar index has muved, up and down, in a very narrow range.

Ron Patterson

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dinopello on October 4, 2006 - 5:20pm

Trust me, I could be totally wrong about what I am seeing. But, I was looking at the graph above $USD dollar index which looks like in '02 a dollar index of 120 dropping in '06 to 85 or so. Then in the graph figure 1: Real price of oil starting '02 or slightly before there is a rise from 50ish to 100ish.

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“Of all races in an advanced stage of civilization, the American is the least accessible to long views… Always and everywhere in a hurry to get rich, he does not give a thought to remote consequences; he sees only present advantages… He does not remember, he does not feel, he lives in a materialist dream.”

—Moiseide Ostrogorski (1902, 302-303)