Barack and the Buck
August 8, 2008; Page A14

The underreported economic news of the week is that Barack Obama favors
a stronger dollar. Even better, he thinks a stronger greenback would
help to reduce oil prices.

That at least is what the Democratic Presidential candidate told a town
hall forum in Parma, Ohio, on Tuesday. "If we had a strengthening of the
dollar, that would help" reduce fuel costs, he said, according to a
Reuters dispatch ignored by most of the media.

This ought to be a bigger story. In linking the dollar to oil prices,
Mr. Obama is pointedly at odds with the Bush Administration and Federal
Reserve, both of which blame high commodity prices on supply and demand,
despite falling demand due to slower global growth. Fed officials -- in
particular, Vice Chairman Donald Kohn -- have expressly rejected any
strong link between the dollar's collapse and the oil price surge since
last August.

This conveniently absolves the Fed and Bush Treasury of responsibility
for the consequences of what has been their destructive and all but
explicit dollar devaluation strategy. If the Illinois Senator rejects
greenback debasement, that's the best news to date about Obamanomics.

Reuters also quoted Mr. Obama as saying "The way to strengthen the
dollar is for us to get our economy back in shape." On that point, he
has it backward: Strengthening the dollar would help the economy -- by
making the U.S. a destination for capital, and especially by reducing
the inflation in food and energy prices that has pounded the American
middle class. Those price hikes may yet tilt the economy into a
recession it could otherwise avoid.

We don't know who is whispering in Mr. Obama's ear about the dollar, but
he's on to a rich political vein. Americans know instinctively that
something is wrong when the Canadian loonie is worth more than the
greenback. Over to you, John McCain.
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