Expect Ben Bernanke to essentially deliver what was printed as an op-ed in this morning’s Wall Street Journal as part of his opening statement when he begins his mid-year economic review for Congress today. He clearly lays out the logic behind what was done so far and how it can all be unwound.

As I’ve been writing for months, the Fed is in a unique position to manage the growth of money and credit during this episode as most of the funds it is “creating” are being put back on deposit at the Fed. They have the clearest possible read on how much money is being put to productive work in the economy and how much is sloshing around in the Fed’s vault. This will allow the Fed to tighten liquidity with great precision (it is hoped).

The bottom-line is that in my estimation the “ammunition and canned-goods” school of inflation mongers is out to whip up hysteria and a quick buck and that hyper inflation is an unlikely outcome given enormous excess capacity in the global economy that will take years to redeploy. This suggests the dollar will do better than the inflation-mongers hope.