Felix Salmon Smacks Down Ben Stein

This is good.

What does Stein mean, for instance, by this?

If oil, for example, becomes denominated in euros, the price in dollars rises — perhaps significantly.

Er, no. If Tarallucci e Vino were to start denominating the price of its cappuccinos in euros, and the dollar continued to fall, then certainly the price in dollars would rise. But that’s because cappuccino prices are fixed. Oil prices, on the other hand, are not: they change from day to day and indeed from minute to minute. At any given point in time, oil has a price in dollars, in euros, in Venezuelan bolivars, or even in pork bellies, should you be so inclined. If the dollar falls, then oil might indeed cost more dollars. But that’s got nothing to do with denomination.

Posted by on May 14th, 2007 at 12:43 pm


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