Catching On Slow, Larry?
Meanwhile, oil has risen over $98, the euro is up to $1.47 and the pound to $2.10, while the dollar is down to 6.27 versus the Swedish krona. If the petroleum inventory report today from the EIA shows continued declines in inventories, oil could easily reach $100 today.
Commodity prices is increasing so fast, and the dollars exchange rate against other currencies dropping so fast, we are close to what one might characterize as a run on the dollar. Bernanke's actions leaves no doubt that he will inflate as much as it takes to bail out failed Wall Street investors, and that will in effect be paid for by holders of dollars, so anyone holding dollars is a sucker who volunteers to pay for Bernanke's bailout. As more and more people realize this the dollar's collapse will continue.
Some correction might come given how dramatic the fall in the dollar has been, but Bernanke's determination to debase the dollar and the growing realization means that the trend will remain for a falling dollar, and that any such correction will likely be short-lived.
Someone who is not catching on is Larry Kudlow himself. He asks "what's it all mean?" in a recent blog post, refering to the rally in gold and oil.
He mentions the obvious explanation, inflation, but dismisses it by pointing to rising stock prices and low bond yields. Yet that just shows how clueless he is. There is no reason for stock prices to fall on the basis of inflation, indeed they should in fact rise from it as the nominal value of earnings and fixed assets rise. They should only react negatively to the extent that this provokes the Fed to tighten monetary policy. And with Bernanke as Fed chairman, that won't happen. And bond yields will also only rise with inflation to the extent this increases expectations that the Fed will raise short-term interest rates in the future, as bond yields should roughly mirror expected future short-term interest rates.
If you adhere to false theories of how the economy works, as Larry does, you will have trouble understanding economic trends.