Bernanke says, 'What inflation? There's no stinking inflation!'

As WTI crude hits $107pb and the national average price per gallon of gas hits $3.51, I present you with this:

It's interesting to note that just last week Fed Chairman, Ben Bernanke (a.k.a Dr. Deficit) gave testimony regarding the state of the economy and the results of "quantitative easing" to the House Financial Services Committee stating basically that inflation is low, too low in fact.


I'm not quite sure what his definition of inflation is exactly, but I doubt he does his own food shopping, let alone, gas up the limo. I won't go into how flawed the CPI (the Fed's inflation measure) is, but The United Nations FAO (Food and Agriculture Organization) published a report last week stating global food prices have hit an all time high in February, after setting two previous records in December and January. See a trend? 

So when Dr. Deficit says to the Financial Committee,

I recognize that the increases in gas prices are very troubling for a lot of people and very difficult, but they are not inflation per se. Inflation is an increase in the overall price level, which is very low...

I start to get worried. 


Dr. Deficit's automated, pre-programmed Harvard grad response of course is roughly that gas and food prices are very volatile and thus omitted from the inflation metric. Unfortunately, someone forgot to educate the good Doctor on the impact of sustained high gas prices on the working middle class in an oil dependent global economy. Did I mention the last time oil was at $107pb in 2008, the economy imploded? I doubt this time around, the "economy" or whatever remains of it, will be able to survive sustained oil above $90, let alone $107. To make things worse, I doubt their calculations took into account the impact on oil prices in the event of an all out war in the Middle East or a major natural disaster, for example.


So while the politicians, experts and economists continue to tout "trickle down economics" (a.k.a "quantitative easing, a.k.a ZIRP, a.k.a too big to fail, a.k.a TARP, et al) as the answer to this depression, I present to you the unintended consequence and alter ego of "trickle down economics" called "trickle up poverty" (a.k.a inflation). Welcome to the new normal.


With that said, as things heat up in the Middle East, it's obvious to expect oil prices to rise, right along with silver and gold despite a last ditch effort of tapping into the nation's Strategic Oil Reserve. How fast can you spell "social unrest?"