The Fed thinks it can print a trillion dollars, letting the inflation genie out of the bottle and then putting it back in. But our greatest threat today isn’t deflation, as the Fed believes, it’s inflation.

IBD Editorials

EXCERPTS:

Unfortunately for Bernanke, there are signs the Fed’s quantitative easing that lasted until March of this year is already taking its toll on prices in key markets.

Food prices, for one, are surging. True, it hasn’t shown up in our own consumer price data yet. But as Britain’s Guardian newspaper reported Monday, prices for a number of food goods — from sugar and rice to tomatoes and other basic vegetables — are up sharply.

Then there’s gasoline — a staple of modern industrial life. The Energy Information Administration reports that the cost of a gallon of gas is now $2.82 nationally, a full $1 higher than when President Obama took office in early 2009.

We’ve said all along that the Fed’s quantitative easing strategy, crafted in large part to push up inflation, is a dangerous one.

Last year’s $1.7 trillion in quantitative easing is already being felt in prices. Now investors are betting that another round of quantitative easing, perhaps another $1 trillion worth, is on the way. And like the Fed, they think it’ll push up prices.

FULL STORY

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