Financial crises, and their aftermaths, can pose greater challenges to central bank independence than the more traditional pain associated with combating inflation.

Judging from the response to the Fed's three-year battle against systemic financial collapse and the risk of deflation, it is difficult to escape the conclusion that financial crises and their aftermaths can pose greater challenges to central bank independence than the more traditional pain associated with combating inflation.

Nobel laureate Milton Friedman's main message for central banks was to maintain a monetary rule that kept the growth of the money supply constant, and would certainly not favor the Federal Reserve's current inflationary plan.

The Fed's job is to prevent inflation and promote economic growth. It should not sacrifice inflation in to manipulate short-term employment numbers.

When countries run huge budget deficits with rapid money growth and a depreciating exchange rate, inflation follows. There is no reason to believe we will escape the consequences.

One possible consequence of Barack Obama's election is a substantial change in the relationship between government and the private sector in the United States.

More than a few observers have pointed out that President Obama and the Democrats in Congress seem determined to repeat the errors of the 1970s by returning to inflationary spending, tax increases, auto company bailouts and cuts to the defense budget while coddling dictators who hate America.

If President Obama and the Federal Reserve continue down their current path, we could see a repeat of the inflationary years of the 1970s.