Federal Reserve Chairman Ben Bernanke has now stated that rising oil prices may lead to inflation.

The recent surge in oil prices is unlikely to have a big impact on the U.S. economy, but could lead to weaker growth and higher inflation if sustained, Federal Reserve Chairman Ben Bernanke said in prepared testimony before for his appearance before U.S. lawmakers Tuesday.

As far as I'm concerned, the trouble in the Middle East is nothing more than a convenient excuse for Chairman Bernanke. Many of us have been predicting inflation and poor economic results since 2009 when the Federal Reserve started printing money.

It's also work mentioning that proponents of printing money have repeatedly stated that it's ok to print money because there's no risk of inflation as long as the labor market and economy are depressed. Yet now the chairman of the Federal Reserve is saying we might be facing weakened growth and simultaneous inflation? Wow, I thought that was supposed to be impossible.

Interestingly, this contradicts a statement made just yesterday by the chairman of the New York Federal Reserve Bank:

Speaking at New York University on Monday morning, [New York Fed President William] Dudley challenged the assumptions that the recent rise in oil, food and other commodity prices is the fault of the Fed -- which has been pouring money into the economy with its recent purchases -- or that there is a risk of a U.S. inflation outbreak.

So Fed Chairman Bernanke is saying there's a risk of weaker growth and higher inflation while NY Fed Chairman Dudley is saying there isn't. These clowns can't even agree on a message and they're in charge of our monetary policy?

And while Dudley said that we shouldn't blame the Federal Reserve for rising food prices--a major instigator of unrest in the Middle East--Bernanke said over a year ago that the prices of commodities in other countries aren't really the concern of the United States anyway:

Federal Reserve board chairman Ben Bernanke said he did not see any asset bubbles emerging in the United States. "We do not see, at this point, any extreme mis-evaluation of assets in the United States," Bernanke said in testimony to the Senate Banking Committee. The Fed's monetary policy is aimed at the domestic conditions, he noted. If foreign governments see bubbles in their economies, they have to use their own monetary policy and other policy tools, Bernanke added. "It is really not the United States responsibility to make sure there are no misalignments in every economy in the world when those countries have their own tools to address them," Bernanke said.

Meanwhile, the Middle East is in flames and Bernanke is saying that rising oil prices could weaken economic growth in the U.S. and lead to inflation. I guess that's what happens when the central bank of the world's reserve currency doesn't pay attention to world events and doesn't consider the international consequences of our monetary policy to be "our responsibility."

Indeed in December 2009--regarding Bernanke's statement that it was ok for the Federal Reserve to ignore international conditions--I wrote: "And asset bubbles forming and collapsing in foreign countries can and will come back to harm our own domestic economy."

And there you have it... printing dollars has increased commodity and food prices worldwide to the point where they became a spark that contributed to the current situation in the Middle East. That situation is now driving up oil prices which threatens the U.S. with weaker economic growth and inflation.

Thanks, Chairman Bernanke for your wonderful insight.