Inflation & USD

Recent developments re the strength of USD and inflation are just perplexing to me:

Inflation has been climbing for a long period since the days of Alan Greenspan. In those days, the housing market and the financials in US were still doing very well and certainly the USD was much stronger than it is today.

Remember Greenspan was raising interest rates before he retired. At that time, despite his rate hike, the Euro and other major currencies were gaining and rising every month and most importantly, oil price was already breaking record high.

What is the link between raising interest and lower oil price or even inflation?

The downward movement of USD has been clear and certain for several years. As far as I can remember, USD has been depreciating from 2004.

The upward trend of oil price has also been clear and certain for several years. Yes, it started to break $50 in early 2004 and climbed rapidly ever since.

The interest rate hike of Greenspan had no effect on curbing oil price's rapid rise. So with the current very low rate environment, how could we expect oil price to go down? True, oil price has fallen to about $110 and may go down further. But how low and for how long?

Remember in 2006 a number of commodities tumbled together especially oil, gold, etc., and triggered a general sell-off in the stock markets as well. But after a short period, they jumped up again. Interest rate was much higher at that time and neither the housing nor financial markets in US were suffering from serious troubles.

No, I really don't see why the price of oil or even other commodities go up with low interest rate, weak USD or a growing US economy and go down with rate hike (or even lip services for rate hike from the Fed), a sudden turnaround of USD strength or a recession in US.

As a layman, the demand and need for oil cannot be reduced and the only direction is up, up and up. Almost everything in our world needs energy, oil, etc. The same applies to other commodities like basic metals. I don't want to repeat the plain fact that demands from rising economies like China, India, SE Asia, Eastern Europe, etc., are part of the driving force behind such upward movements. What is more important is climate change, global warming and pollution. These problems will also consume more energies, basic metals, food and other natural resource, etc.

I am not a bull in commodities nor am I pleased to have high oil and commodities price. If there is a choice, I would like to see our world return to Nature when we can live without industrialization, pollution, etc., but such idyllic garden of Eden has never existed on earth. So let's face the reality.

The present retreat of oil and commodities is offering a very good chance for poor guys like me to consider the tactics and strategies that we can take to protect ourselves against the unending rise of prices and inflation in the future. I have been searching for the way to survive such harsh future but I must say that every touch seems to turn gold into stone. Yes, I see a little light at the end of the tunnel... but I can't and won't tell you.