Bernanke and Inflation

Yesterday the chairman of the Federal Reserve, "Helicopter" Ben Bernanke, announced that a weak US currency posed a risk to inflation. He also danced around the rumor that the US Central Bank would raise interest rates in the coming months.

At first glance, Bernanke's statement may seem logical. After all, while most people understand that inflation is indeed a bad thing, the causes of inflation are widely misunderstood.

If what Bernanke says is true--that a weaker US currency poses a risk to inflation--one might also subscribe to the theory that wet sidewalks cause rain. In other words, Bernanke confused cause and effect; a weak dollar does not pose a risk to inflation - inflation is the result of a weaker currency.