A very sensible article, and what I have come to expect from Mr. Gross. Few other journalists writing about inflation are willing to write (or even know) about the way government indices of inflation have been scrubbed of the very commodities - food and energy - which have made life increasingly difficult for the working class in America.

He's also correct to point out that price controls can be a disincentive for investment to improve production of an inflating commodity.

He didn't mention this point, and I am happy to rush into the breach and make it for him: Markets efficiently set prices where there is adequate competition. Where there isn't - as when cartels are operating, or a monopoly - prices become extractive. This is an important point in the context of the article, because it's energy prices that are driving everything else, and energy prices are semi-controlled by cartels.

What should we do to contain inflation?

First, we need to acknowledge it. That means including energy and food in our indices. If our indices are crap, our projections and public policies will be crap.

Second, we need to grapple with cartels. But I don't argue that we should set their prices for them. Instead, I argue that noncompetitive pricing should be punished by applying disincentives (taxation) on their products.

That sounds counterintuitive, doesn't it? Adding taxes would drive prices up. But that's the point. In the short run, general inflation would rise. But in the longer term, energy from alternative sources will come on line faster. The way you bust up a cartel and defeat their control over pricing is by encouraging growth of competition from other sources.

The long-term health of our economy depends on us getting off of foreign oil and insulating ourselves from cartels and price shocks. But it's worth mentioning that, as a side benefit, disincentives could help with several other problems: global warming (reducing CO2 emissions) and the national debt.

Next: at $9 trillion and rising fast, our national debt has grown by over $4 trillion under President Bush. It's on track to double during his Presidency. That's a lot of paper to flood into financial markets. I think it's depressed the value of the dollar, which has made imports more expensive and contributed to inflation. It would be helpful to start paying down the national debt. Serious CO2-emitting energy taxation is a good place to start.

My last suggestion for combating inflation is to start busting monopolies and near-monopolies wherever they rear their ugly heads. There has been an orgy of consolidations across many industries during the past 20 years, an orgy fueled by deregulation, and it has depressed competition in many sectors of the economy. Regulate, bust 'em up, restore competition, and it should put a damper on inflation.

Obviously, I'm not a laissez-faire capitalist. Greenspan would turn several ugly shades of purple, were he to read this. *shrug* His calculated brand of extremism has brought us to this point. I think it's about time for the mixed economy folks to fix his mess.