Tao, you are right, inflation ravages savings. Overall the USA is a debtor nation however. And on balance inflation is very useful to debtors assuming their incomes increase at least as fast as the inflation rate but interest on debt is at fixed rates. Personally, I dislike inflation, because I have virtually no debt and lots of cash. Keeps me humping to figure out how to put it to work to stay even with inflation, let alone make a real profit.
It is one of the reasons but there are fundamental reasons of oil price rise. China/ India rise, the lack of big new finds for few decades and exhaustion of existing reserves. Peak oil in short.. By big finds I mean super fields.
I don't think Greenspan is (was) a "scapegoat". I think, he, more than any other single person, was responsible for the mess. There is a large cast of characters vying for the honorable mention however.
I didn't phrase it accurately. I believe he is as culpable as anyone, although I'd throw as much of the blame on Rubin and Summers as well. There was a systematic dismantling of all the safeguards from The Great Depression during that late 90's early 00's that set the stage for this.
it'll be interesting to see how decision makers deal with emerging markets' increasing oil consumption as it increases inflation, slows down recovery, can't get american workers to work, and robert gates said awhile ago land war in asia is out of the question
A simple calculation will tell you what fraction of the rise in oil price is attributable to dollar deflation.
The data don't bear out this conclusion, unless you see a roughly 4-to-1 relationship between the dollar and crude when the dollar falls and crude rises. The US dollar index hit a two year high (about 89 - indexed against the euro, yen, GPB, SF) about this time last year and at that time crude traded down to almost 67. The dollar index has since fallen roughly 20% (it is now about 73) yet crude has risen nearly 80%. Had there been a strict 1 to 1 correlation, crude would have risen just 25% and would be trading in the low 80s instead of 112. So clearly, other factors beyond the value of the dollar are predominant in the changing price of crude over the last year.