Hot off the wires:
“Oil prices rose by more than $1 a barrel in Asian trading Thursday as the dollar weakened after the U.S. central bank cut its key interest rate.”
“Interest rate cuts tend to weaken the dollar, and investors buy commodities such as oil as a hedge against inflation when the greenback falls. A weaker dollar also makes oil cheaper for overseas buyers.”
The Fed cut interest rates “to spur the economy” — that is, to make it easier for d-bags to borrow money and engage in further deficit spending. Cutting interest rates also devalues the dollar in relation to other currencies.
A weak dollar means oil imports cost more for the U. S. but it’s cheaper for other currencies, which spurrs demand in places that are thirsty for oil like India and China.
$5 a gallon? Thanks Mr. Bernanke!