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 The former Fed chairman urged central banks to avoid suppressing asset bubbles, which is "exceptionally difficult" to do.
Greenspan also said that the global economy can handle higher commodity prices through strong monetary policies by central banks and that he expected major increases in commodity demand from rapidly developing nations.
Central banks avoid worldwide inflation by maintaining monetary tightness at appropriate levels, he said.
"I'm concerned that we were moving from this 20- to 18-year disinflationary period and beginning to move in the other direction," Greenspan said.
Despite crude oil prices being above $90 a barrel, the global economy is still functioning, he said, indicating that the "underlying structure is doing well."
Greenspan also predicted that the U.S. dollar will fall further against East Asian currencies in the long term if technological innovation boosts productivity, standards of living and therefore growth in the region.
[Associated Press]
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