Jim Crawford blogged about inflation, and I have to add that much of the increases in commodity prices we are seeing are reflective of a weak dollar… for example, gasoline prices in Europe have not increased anywhere near as much as have those price in the USA — and note that in the UK gasoline has already been selling at over $7 per gallon for a long time now, due to taxes on fuel, which w have very low such taxes here.

We will see much more inflation than we already have because the dollar is over valued, and so prices will increase. Also, because of how leveraged we all are, this will remain an issue for years to come. Americans have simply been spending more than we make for far too long. And it is now time to pay the piper. That is part of the mortgage meltdown issue, and it is part of the inflation issue.

What we really need is not a lowered interest rate, or a higher interest rate, but a system that rewards savings, that discourages borrowing, that taxes appropriately where needed, such as on gasoline… where we all drive huge gas guzzlers yet comment on how we despise our dependance on foreign oil.

And no one ever remarks on the fact that there are much better uses for oil than for burning… a great variety of plastics used in health care, and in high tech applications, for example, will be impossible once we have used up all the oil for burning purposes.

So it is time for America to realize that we are no longer the world powerhouse in economic terms, and that this delusion of prominence will only become increasingly delusional as China and India, and the rest of the developing world catch up with the western countries.

How about that?