The big news at the end of the last week was barely noticed. Inflation – which had been going down for the last 30 years – may have finally bottomed out.

It’s too early to know for sure. But January showed an up-tick. Prices rose 0.4% during the month, say the number crunchers at the BLS.

Last year, the core rate of consumer price inflation in the US was only 0.7%. Nothing, in other words. The feds were desperately adding to the base money supply. But the banks didn’t lend. And people didn’t have jobs. So the money never got into the consumer economy. It was, after all, a Great Correction.

Instead, the hot money went overseas, where it bid for hot foreign stocks and hot “auction-priced” global goods – like food and energy. Commodities soared. Food riots broke out. Cotton just hit a new record high. Oil is trading over $100 a barrel, for Brent Crude.

And then what happened?

What goes around, comes around. Inflation began leaking back into the US.

Inflation went out of the US – courtesy of the feds. Foreign central banks had a hard time keeping up with it. They had to increase supplies of their own currencies to soak up the US dollar liquidity. Pretty soon, the whole world seemed to be bubbling up.

But now, the foreigners are re-exporting inflation back to us. How do you like that? Surely there is some congressional committee ready to investigate. Surely there’s some member of Congress ready to make a jackass of himself by calling for a ban on it.

In the meantime, if you want to buy a food item imported for abroad you’ll pay about 30% more than you did a year ago. Or, if you want to buy a barrel of oil, that will cost you about 60% more.

And now this imported inflation is raising consumer prices across the USA. Almost every business in America uses imported energy. Every American eats. As far as we know, you can’t buy home-grown pineapples or coffee beans – not in the 48 states! And so, what do you know? Prices are going up.

In January, core consumer prices – not including food and energy, directly – rose 0.4%.

Wait a minute. If that happened every month, it would put the CPI at 4.8% for the year. That would be a lot higher than the 2% maximum allowable CPI that Ben Bernanke will permit. If it gets any higher – he promised on national television – he’ll put a plastic bag over its head…just as he would to an aged relative.

Of course, we don’t know whether disinflation has really bottomed out or not. And we remember the early ’80s, when inflation topped out. Nobody knew for sure that Paul Volcker really had the matter under control. It took years before the new trend was clear.

Most likely, we’ll see the same phenomena again…but distorted, as though reflected, grotesque and absurd, as in a bent-up mirror.

This time, we’ll find out that Ben Bernanke has lost control completely. He may want to raise rates. But with 30 million people unemployed…will he be able to do so?

And let’s imagine that this inflation squeezes corporate profits – it’s already happening. How long will it take before investors begin to dump stocks? In the early ’80s, they slowly, cautiously began to buy stocks…this time they’ll be selling.

So, Ben Bernanke – guardian of the nation’s money, guarantor of full employment, promissor of a bull market on Wall Street – will be in a very uncomfortable position. He’ll have the plastic bag in his hands. He’ll want to stifle inflation. His hands will shake. His voice will quake.

And he won’t be able to do it….

But heck, that’s still in the future…maybe far in the future. If disinflation has bottomed it could still be years before we’re sure of it…and months or years before Bernanke’s bluff is called.

Bill Bonner is the President of Agora Publishing. For more on Bill Bonner, visit The Daily Reckoning.