The 2008 oil bubble: Causes and consequences
We argue that "the 2008 Oil Bubble" was directly and indirectly created by the Federal Reserve in response to deflationary risks that resurfaced after the housing bubble burst and the resulting credit crisis of 2008. Deflationary risks first appeared after the dot.com bubble burst in 2000 and after the terrorist attacks on September 11, 2001. Manipulation of the US dollar value has been one of the key emergency tools in the Fed's arsenal. During the entire period from 2000 to 2008, the US dollar has been falling, while the price of crude oil has been rising, with the culmination in July 2008. If other global central banks embrace the Fed's anti-deflationary strategies, the consequences could be dire for the global economy, potentially resulting in an ultimate gold bubble.
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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- James D. Hamilton, 2008.
"Understanding Crude Oil Prices,"
NBER Working Papers
14492, National Bureau of Economic Research, Inc.
- De Long, J Bradford, et al, 1990.
" Positive Feedback Investment Strategies and Destabilizing Rational Speculation,"
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American Finance Association, vol. 45(2), pages 379-95, June.
- J. Bradford De Long & Andrei Shleifer & Lawrence H. Summers & Robert J. Waldmann, 1989. "Positive Feedback Investment Strategies and Destabilizing Rational Speculation," NBER Working Papers 2880, National Bureau of Economic Research, Inc.
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