Back in 1980, I was doing graduate study in international finance at the University of Dallas when I took a course in the economics of energy (which is not surprising in Texas, I guess).  I learned that oil is the most competitive commodity in the world, as well as the most regulated.  Most of all, I learned that oil is the most important commodity in the world, even more important than gold.

So, it was surprising to me when I heard Fed Head Janet Yellen describe the impact of oil’s recent crash as “transitory.”  As we know, this commodity has caused a massive shift of wealth to the Middle East from the rest of the world.  The lack of that commodity nearly brought our economy to its knees in the early 1970s.  It accounts for 10% of all construction in this country, larger than government or office buildings or shopping centers.  It is largely responsible for the robust job growth we’ve seen this year, due to fracking.

How many national economies have we seen rise or fall with the price of oil?  How many national leaders have we seen replaced, when their oil-based economy suffered?  There is even a remote possibility of Russian president Putin being deposed in the near future.  How many wars have we seen fought over oil?  How many people have died?

“Transitory”???

I guess the way to look at this unfortunate choice of words is that she was not under-estimating the importance of oil.  She was just suggesting that the price of oil will rebound within three months, agreeing with Goldman Sachs, and that the geopolitical changes will also be short-term.  Now, is that good or bad?