When Ronald Reagan entered the White House in 1981, he openly predicted a decline in the price of oil. With the value of the dollar on the rise after a decade of debasement by Presidents Nixon, Ford, and Carter, Reagan knew that a reversal of dollar policy that vandalized reason would bring down nominal prices at the pump.
Was Reagan predicting years of gloom? Figure that oil had recently risen as high as $40/barrel. Did the latter signal an economic boom? No and no to the two questions. Oil had been expensive not because demand for it well outstripped supply, but because the dollar in which oil was priced had been in decline for much of the 1970s.
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