Interest Rate Cuts Cause Inflation

I finally have found an article that states what I have been saying to Nomad for a few months now. When The Fed lowers interest rates, it weakens the dollar which is contributing to the rise in cost of oil/gasoline. I asked an economic professor who I know and he confirmed that this made sense to him, but economic policy wasn't his specialty. To put it simply, the by product of lower interest rates is that there are more dollars in the economy. When there are more dollars, the value of each one goes down. As the value of the dollar goes down, prices go up. So, each dollar buys less or any given commodity. (Like Oil) I'm not sure The Fed shouldn't have lowered interest rates, but we need to be honest with the American people that there is no magic fix to our current situation. Now that things have stabilized some, the best policy is probably to do what we can to strengthen the dollar. This is the only way to really lower the cost of oil, gasoline and food.

Gas Prices and Inflation

This article where it talks about oil hitting $104 per barrel is a little old, given that, as of this posting, oil has hit $108.32 per barrel. The previous record (adjusted for inflation) was $103.76 per barrel. What struck me most is the actual price - $39.50 per barrel in 1980! That's a rate of 171.31% over 28 years. While the price of oil is high, the inflation rate is further proof that we must get our economy under control.