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Tuesday, October 12, 2010

Dollar Depreciation and the Higher Cost of Living

This leads to higher mortgage costs which will put pressure on housing prices.
In turn, dollar-denominated commodities have surged. Since August 27, when Bernanke first suggested that the Fed might consider another round of QE at his Jackson Hole speech, the price of gold has jumped 9%; the price of copper is up 12%; the price of crude oil has increased by $7.49; and soft commodities like wheat, cotton and corn have all shot higher.
Strategists like Gluskin Sheff's David Rosenberg have questioned what this currency debasement will now mean for your friends and neighbors. Rosenberg recently argued that, with oil back over $80 per barrel and US gasoline prices at the pump heading back above $3 per gallon, we will come to think of this dollar depreciation as a source of restraint for the consumer.
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