DIANE SAWYER: Gas prices?

CHAIRMAN BERNANKE: Well, gas prices are — are a major problem. They’re obviously — a hardship for lots of people. It must be awfully frustrating to get a small raise at work and then have it all eaten by a higher cost of commuting. From the economy’s point of view they’re — a moderate risk — they’ll —

Ms. SAWYER: Moderate?

Mr. BERNANKE: Moderate, I would say.

Ms. SAWYER: But threatening the recovery?

Mr. BERNANKE: At this point — at this point I would say it’s still moderate.

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That exchange is how the chairman of the Federal Reserve and doyenne of ABC News began their exchange in respect of gasoline prices. The chairman rattled on as the journalist tried to pin him down on whether he thought gasoline prices might derail the recovery. “We’ll see a little bit higher inflation the next few months because of the higher gas prices. And we’ll see consumers — with a little less income to spend. And that will also be a bit of a hit on growth. But at this level we don’t think yet that — particularly given the other good news we’ve seen in — in labor markets and so on — we don’t think it’s gonna be anything that’s gonna — stall the recovery.”

“Higher inflation the next few months because of higher gas prices” is the telltale phrase. Not once does the chairman mention — he’s not asked about it and doesn’t bring it up — that the value of gasoline has, in recent years, been falling. That is, measured in gold, gasoline at the pump is cheaper today that it was at its peak in late 2005 and lower than in the early months of the Obama administration. We’ve been harping on this point for a number of months now, first in an editorial called “The Silver Bullet” and then in an editorial called “Obama in Your Tank.” There’s a chart of the falling value of gasoline at a Web site called pricedingold.com, which shows that the plunge in the value of gasoline has actually been quite dramatic.

So the thing to remember as the numbers on the gasoline pump start moving towards $70 or more to fill a tank is that it’s not the gasoline that’s going up. It’s the dollar that’s going down. This is the feature of Bernanke Gas. We are in an age where to the chairman of the Federal Reserve inflation is “because of higher gas prices.” So much for Milton Friedman and the notion that “inflation is always and everywhere a monetary phenomenon.” Somehow we’ve ended up with a Federal Reserve chairman who reckons it’s a gasoline phenomenon.