El Opinador Compulsivo

WSJ:

Had the Fed merely kept the dollar stable against the euro, the price of oil would be closer to $80 than to $131 a barrel.

No one denies that supply and demand play a role in commodity prices, but oil on global markets is denominated in dollars. When the value of the greenback falls, and especially when speculators anticipate that it will fall further, oil sellers demand more dollars for their product. This was the experience of the 1970s, the last time the Fed lost its monetary moorings, and we have been living through a sequel this decade.

...Republicans may be punished this November for forgetting that the Reagan policy mix had two levers – tax cuts and stable money. The Bush Administration got tax policy right. Its tragic error was falling for the siren song of dollar depreciation, and abetting a Federal Reserve that even now seems not to comprehend the damage it has done.