As if a sagging economy, the subprime fiasco, a deepening housing recession, and rapidly tightening lending standards weren’t enough to worry about, there’s growing concern about a potential new crisis: a much higher level of inflation than most of us can perceive — a return to double-digit inflation, the likes of which we haven’t seen since the late 1970s and early 1980s and more than double the current rate. Stories about inflation and stagflation are a dime a dozen, but the idea here is that we could return to the astronomical inflation level of 14.6%, which occurred in the first quarter of 1980 after a round of oil price increases and thus signal a new round of economic chaos.

One astute global market analyst, Tony Sagami, offers a frightening dimension to the inflation argument, which he contends will create a lot more economic pain and send the financial markets skidding, bloodying the consumer. “An inflation crisis is not coming; It’s already here, and it’s going to get a lot worse,” he says.

Mr. Sagami, who tracks the international investment arena for Weiss Research in Jupiter, Fla., predicts that the current inflation rate will more than double to the low double-digit territory by 2010. In the interim, that surge, he predicts, will “give the Dow about a 33% haircut,” knocking it down to around 8,000 from yesterday’s close of 12,040.39.

The government’s latest spin on the inflation — that it’s not an economic threat — is hardly supported by its latest numbers. The Consumer Price Index rose 0.4% in January for a 12-month overall inflation rate of 4.4%, up from 4.1% reported in December. It was the third month in a row that the annual inflation rate has topped 4%. Food prices have risen 4.9% over the past year, the fastest pace in nearly two decades.

An economist at Morgan Stanley, Richard Berner, calculates that grains and other foodstuffs have jumped between 10% and 250% from a year ago. The supply-demand balance, he believes, favors further increases.

The skyrocketing price of oil, which recently topped $100 a barrel, has been the chief inflation culprit. Energy prices are up 19.6% over the past 12 months and 43.6% in the last three months.

What makes Mr. Sagami think inflation will go through the roof? China and India, he says, which will require a growing abundance of those precious commodities to fund their breakneck growth plans.

Mr. Sagami dismisses what he describes as “those phony government inflation numbers.”

“That 4.4% inflation number we got in January is pure horse manure,” he says. “It’s really much higher if you factor in the real world.” True inflation, he argues, can be determined by taking a hard look at the real inflation numbers as reflected in the “housewife index,” such as bread, cheese, gas, drugs, and tuition.

“Nobody is waiting in long lines to buy something; we’ve got the supplies,” he says. “The problem is, demand can’t keep up with them.”

To combat American inflation, Mr. Sagami strongly suggests investors eliminate dollar-denominated investments (both stocks and bonds) and “hide” in overseas securities. His anti-inflation strategy: Own energy and metals, such as copper, aluminum, steel, and gold. His best bets in these areas: China’s largest natural gas company, CNOOC Ltd.; the world’s largest gold producer, Barrick Gold, and a large Brazilian copper company, Companhia Vale do Rio Doce.

The president of the St. Louis Federal Reserve, William Poole, recently sounded an ominous note, warning that further interest rate cuts may accelerate inflation to an even more unacceptable level.

A San Francisco money manager, Gary Wollin, also hoists the warning flag, telling me, “The next crisis the market faces is an inflation crisis,” which he figures will put additional pressure on the consumer in a weakening economy. “It’s another reason to be wary of the market and build cash reserves,” he says.

One unfortunate note for consumers, he observes, is that rising inflation this time won’t push their home prices higher because of the current housing recession. Mr. Wollin, who manages nearly $100 million of assets under the banner Gary Wollin & Co., tells me he can’t believe what’s happening to his food purchases, including some favorite fruits and vegetables, such as cucumbers, bell peppers, bananas, and oranges.

While the government tends to downplay inflation as a serious economic threat, Mr. Wollin thinks Washington is blindsided. “Inflation is crazy, especially food and energy; practically everything I look at, except maybe electronics, is going up in price,” he says. He notes, for example, that the supermarket chain at which he shops, Safeway, recently initiated a $0.78 gas surcharge tax. “That $0.78 is no big deal, but if gas goes up more, that tax will also go up more.”

dandordan@aol.com