Dollar Diddly

Fed Chairman Bernanke caused a surge in the dollar’s value, more from what he did not say than what he did. Gold and silver fell in value. In reading his prepared remarks http://www.federalreserve.gov/newsevents/testimony/bernanke20120229a.htm, the content doesn’t reveal anything new or exciting. I didn’t hear the questions that were presented to him so, unless something truly extraordinary was disclosed, it doesn’t seem there is a sound reason for sudden faith in the dollar as demonstrated by the market. There is nothing sound or reasonable in the stock market; we know that much. I am leery when the market moves to the sound of the Chairman’s voice. Greenspan’s voice massaged the markets. The result was economic mayhem.

I was inspired by another blogger’s commentary, on elevated gas prices, to research the how and why of it. For a few weeks, I have been of the opinion that prices at the pump have gone to unexplored altitudes in an effort to oust Obama. Once again I forgot what I already knew, the dollar is weak. Oil prices haven’t fluctuated wildly over the past year, it just takes more dollars to buy oil because the dollar isn’t worth diddly. Oil is priced in dollars. Dollars have declined over the past decade or so (PRE-Obama). Commodity prices have not increased dramatically, it has taken more dollars to buy commodities priced in dollars.

I see this increasingly in my personal life. I am frugal. When the economy tanked I didn’t think it would affect me terribly because I wasn’t leveraged at all.

It took me a while to notice that I had completely stopped incidental discretionary spending; no more cups of coffee with a cookie as I did my errands, less cards and notepaper. As discretionary spending decreased, mandatory spending reductions were not far behind. Often the fridge is empty. It’s empty because the dollar is very weak and our purchasing power is limited.

Don’t listen to the talking heads, assess the economy in your own little kingdom. Everything costs more because the dollar is weak. It’s weak because it isn’t worth diddly.

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About elroyjones

Married, no children, responsibly self-directed, living happily.
This entry was posted in Politics and tagged , , , , , , . Bookmark the permalink.

4 Responses to Dollar Diddly

  1. Peggy says:

    Very interesting. Causes me to think, which I always enjoy. Again, I simply do not know how people who make less than me do it. WIthout social programs, I think we’d be in a whole lot of deep doodoo.

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