Today, the NYT is telling us that, "oil, foodstuffs and many other raw materials are priced in dollars, and as the currency falls in value, suppliers of these commodities demand higher prices just to stay even." Suppose all of these commodities were priced in pig intestines and the dollar fell? It would cost us more dollars to buy pig intestines and therefore it would cost us more dollars to buy oil, foodstuffs and other raw materials. Come on folks, this is real simple, it doesn't matter what currency is used to keep the accounts, if the dollar falls in value, the cost of everything will rise in dollar terms. This piece also commits the sin of having an economist, who somehow missed the housing bubble, say that it would be bad for the dollar to keep falling. This economist is wrong yet again. The surest way to stimulate the economy is to have the dollar keep falling. It will increase our exports and decrease our imports. This process must happen in any case and it is best that it happen as soon as possible.
--Dean Baker
