An oil well near Long Beach, Calif.
An oil well near Long Beach, Calif. - 
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Scott Jagow: Sometimes when you get change, you get a bill that looks like it's been in the washer a few times and crinkled up in somebody's pants. That's the kind of shape the dollar is in right now. It hit close to an eight-year low against the Japanese yen this morning. It's taking a daily beating from the British pound and the euro.

And the dollar's weakness is only driving up the price of oil even further. Today, oil is near another record -- $108 a barrel. Jill Barshay has more on the oil market.

Jill Barshay: Oil's been steadily climbing for eight years now. But the last two months have really been crazy.

James Hamilton is an economist at the University of California San Diego. He specializes in oil price shocks. He says speculators are borrowing money on the cheap and pouring it into oil futures.

James Hamilton: I think the lowering of interest rates is the biggest single factor. It basically reduces the downside risks for commodity speculators.

Speculators may be hitting jackpot, but the price spike is no good for the economy. Hamilton says historically, oil price increases are often followed by recessions. He's already seeing bad omens. Both Detroit auto sales and consumer confidence are down.

Hamilton: If consumption falls, we're surely in a recession.

Hamilton says the oil price spike is a sobering lesson in monetary economics. The Fed is lowering rates to keep the economy out of a recession. But it's running up the price of oil, which could push the economy into one.

In New York, I'm Jill Barshay for Marketplace.