Happy days are, make that, stagflation is here again.  So says Ronald McKinnon in a Wall Street Journal column.  Stagflation was memorialized by the 1970s experience of high inflation and economic stagnation.  The Stanford professor says it's rearing its ugly head again.

He lays out the cause:

Although many forces buffet the U.S. economy, the near-zero interest rate policy of the Federal Reserve is the prime contributor to the current bout with stagflation.

But Fed officials claim that higher commodity prices don't presage a return of inflation.  McKinnon disagrees:

For more than two years, the Fed has chosen to keep short-term interest rates on dollar assets close to zero and—over the past year—applied downward pressure on long rates through the so-called quantitative easing measures to increase purchases of Treasury bonds. The result has been a flood of hot money (i.e., volatile financial flows that are subject to reversals) from the New York financial markets into emerging markets on the dollar's periphery—particularly in Asia and Latin America, where natural rates of interest are much higher.

He continues to put the blame at the Fed's feet:

So the proximate cause of the rise in U.S. prices is inflation in emerging markets, but its true origin is in Washington. . . Since July 2008, the stock of so-called base money in the U.S. banking system has virtually tripled.

Shadowstats has a hyperinflation report out (pdf) with more facts and figures.  Judge for yourself.  McKinnon concludes:

The stagflation of the 1970s was brought on by unduly easy U.S. monetary policy in conjunction with attempts to "talk" the dollar down, leading to massive outflows of hot money that destabilized the monetary systems of America's trading partners. Although today's stagflation is not identical, the similarities are striking.