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The inflation watch has begun. Bernanke is warning us inflation is on its way.

I remember in Econ 101, the idea of "dollar bombs" being dropped -- so that currency is doubled, and soon all price double as there are only so many goods to go around.

So as airlines charge for bags and food prices rise and oil takes off in a hyperinflationary way, everything else will follow suit. This is the next big oil spill. Oil prices spilling over the economy and fouling everything.

Everything oil touches won't turn to gold, but will go up in price. The more oil prices rise, the more everything else will rise and the less the speculators will make.

Yet governments seem paralyzed to stop it, and there may be a few that think they can turn it to an advantage. In the end, whatever reserves they have in the form of the balance of payments will be washed away as the cost of things spike, and these balances erode.

Maybe the current generation will laugh along in the old Saturday Night Live classic with Dan Akyroyd as "Jimmy Carter" who tells us "inflation is your friend." Who wouldn't want to smoke a $500 cigar, or wear a $7,500 suit, or living in a $10,000 apartment. "I know I would." It ends with "Carter" calling the Treasury Departments and saying, "Hello, this is Jimmy. Print me some more of them 20s."

In the end, though, few of us will be laughing.

Dana Perino is under strict instructions … to not talk about the dollar.

Q I’d like to follow up on their refusal to talk about the dollar, if I could. I mean, we’re in a kind of a bad situation here, when OPEC says the reason for $105 or $106 a barrel of oil is the falling value of the dollar — and you won’t address that issue. Where do we go to find out who is right?

MS. PERINO: Well, as he just said, the Treasury Secretary is where you go to talk about the dollar. It’s a longstanding policy that predates this administration, and I’m not going to change it today. But Treasury can talk about it.

Q I don’t expect you to change it, but I do expect you to be able to say whether OPEC is completely wrong about this, or whether there is at least something to their claim that the dollar is responsible for the high price of oil right now.

MS. PERINO: Wendell, I’m under strict instructions, and have been from the beginning, to not talk about the dollar, and I’m not going to get fired to satisfy your question.

—White House Press Briefing, Friday, March 7, 2008.

Had you just sat through a long presentation on the rotten economic situation in the U.S., which studiously avoided any mention at all of the collapsing value of the government’s fiat currency, you might also want to get a some answers. In particular, answers about the calculated policies of the Department of the Treasury and the Federal Reserve to make the world safe for finance capital—and doing it by exercising the federal government’s money monopoly, so as to suck every last drop of purchasing power out of working people’s wages and cash savings (which increase, if they ever do, much later, and much more slowly, than the commodity prices that we have to pay in order to go on driving and eating).

You might want some answers; however, you’ll have to get them from somebody other than the White House press flack. She believes that if she says word one about the situation, she’ll likely be fired for it.

(Via Crooks and Liars 2008-03-11, via Lew 2008-03-12.)

Here’s a weird passage from Lew Rockwell’s article in the next-to-last Mises Institute newsletter. Not because the basic point being argued is false, but because of how the argument leaves off at the end:

Now, Ron Paul stands in this tradition of thinkers in every way. Even on the campaign stump, he speaks about the evil of fiat money and Fed management of the nation’s money stock. In a true sense, he says, we’ve put a cartelized gang of central planners in charge of the good that constitutes half of every economic exchange, and we are paying the price in terms of declining purchasing power, exchange-rate chaos, rampant debt, and growing crises in sector after sector.

Is there a way out? Most certainly! It goes by the name of gold. Make the dollar as good as gold and you eliminate the inflation problem and the business cycles that go along with it. Here is the great secret of the gold standard. The problem is not that it is unviable from the perspective of economics; the problem is that there are many people allied against it: the big banks, the creditor class, and government. You see, gold would provide a hard-core anchor for liberty. Under the right form of the gold standard, government could no longer spend with impunity or run up debt without limit. The resources it spent would have to be raised the old fashioned way.

… By stealing it?