File - A man works on the rig of an oil drilling pump site in McKenzie County outside of Williston, North Dakota in this file photo from March 12, 2013.REUTERS/Shannon Stapleton
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Oil prices are falling, at a historic rate.Even though oil is far less critical to the developed world's economies than it was in the 1970s, cheaper oil should be a net benefit.That is why falling oil prices have been accompanied usually by rallying stock prices, particularly in the U.S., where most Americans are still wedded to the automobile. Oil prices are still falling, but now that is viewed as a Bad Thing.In the U.S., 10-year treasury yields have dropped well below 2.2 percent once more, and below the level at which they closed on Oct. 15, the "flash crash" day in the bond market when yields suddenly dropped below 2 percent, triggering consternation.In the U.S., inflation break-evens for the next 10 years have dropped to 1.62 percent, their lowest since the autumn of 2010, when falling break-evens prompted the Federal Reserve to launch the "QE2" round of bond purchases.How these two polar forces balance out will determine whether cheaper oil proves to be a Good or a Bad Thing.
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