Financial Wisdom and Wealth

Oil prices have decreased daily over the past month, down by about 25%. I recently came across a “news” article by Henry Blodget that claims that the lower oil prices are bad news for our economy:

An important catalyst for the recent stock rally has been a sharp decline in the price of oil: Outrageous oil prices are killing the economy, the theory goes, so if oil prices drop, the economy will be off to the races again.

It’s true that a sustained fall in oil would ease some pressure on the economy, but the recent decline is hardly unalloyed good news. Oil prices are dropping because the global economy is weakening — and it’s hard to see how that’s positive for stocks.

What??? oil prices dropping because the global economy is weakening??? This is just another liberal media spin to make good news look bad. The author has no clue how economics work. The truth is, the US economy is becoming stronger, hence the reason why the rest of the world’s economy appears to be weakening in comparison to the United States.

When the US economy becomes stronger, the value of the dollar increases. Commodities, such as oil and gold, are inversely related to the value of the dollar. When the dollar increases in value, commodities decrease. The value of the US Dollar has had a rapid increase over the course of the past month. During the same time period, Oil has droped 22% and Gold has dropped 19%.

So to answer the question on whether plunging oil prices are good news or bad news, are you an optimist or a pessimist? Are you a conservative reporting facts, or are you a liberal spinning the news to fit your hidden agenda?