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Last week's edition of The Economist carried a cover in which the giant spectre of inflation lurked beneath an escalator of well-heeled business people.

The leader article suggested that it is not the rich countries that have most to fear from the effects of runaway inflation, but 'policymakers in emerging economies [who] are the ones who should take most heed' of the return of giant inflation. Too many are assuming that the current situation is a short-term supply shock and are relying on price controls and subsidies to cap prices rather than by raising interest rates.

Loose monetary policy in the 1970s opened the door to record rates of inflation. Loose monetary policy is currently characteristic of the emerging economies of the Gulf region, including Oman, where the currencies are linked to the dollar, and concurrently where growth in prices has been highest.

The economic history of the 1970s could repeat itself. Starkly, The Economist Warns that "the longer emerging economies hold down their exchange rates, the greater the risk of rising global inflation." Instead, the Gulf governments are following US moves. Since this doesn't make economic sense, it's all to easy to assume that political influences are at work.

The US Federal Reserve cut interest rates to just 2% at the end of April, a move mirrored almost immediately by the UAE Central Bank since the dirham is pegged to the dollar. As a result of the continuing weakness of the US dollar, and the dirham link, European and Russian investors have been crowding in to UAE to buy property and assets, assuming that their investments are virtually risk-free, with Gulf currencies remaining committed to the dollar peg.

"Dubai property with its 6%-10% rental yield looks an excellent buy in a world of 2% money."

"Prices that look attractive today could be out of reach for many by the late autumn as a house price spiral takes off fuelled by lower and lower US interest rates. That could even prove to be the economic force that breaks the dirham peg."

But revaluation would bring its own problems, possibly attracting more investment which could raise inflation even further.

How much would that truly matter to the local market which continues, remorselessly, to entice the rich world to spend its wealth in Dubai? Are all nationals adequately housed? Oman's development plans appear pallid by comparison. Gulf News, almost looking over its shoulder in reporting that Oman currently had just one nine-hole golf course. although ten are planned, commented that Oman "must offer more than beach and sun if it is to compete with the Gulf tourism hub of Dubai."

While property remains attractive to foreign investors, MEED has reported that international investors have become wary of investing in Middle Eastern debt because of the risk of appreciation of local currencies. Regional banks have adopted local currency tranches, with international banks raising the partner dollar funding.

To be honest, I haven't found it at all easy to discover the Central Bank of Oman base rate. By a devious process of deduction, I have arrived at a figure of around 8.5% - high by the standards of the US Federal Reserve. But swingeing increases in bank interest rates could help to deter monetary demand.

So given this wealth of overseas commentary, what can we make of an item published in the Times of Oman on 21st May, entitled How to tame the bull?

Broadly, the writer proposes the view that inflation is OK, really. At the time, she had not had the opportunity to read the warning words of The Economist quoted at the opening of this piece. If you believe The Economist instead of the Times of Oman, then policymakers in Oman are not taking this round of inflation seriously.

I can only quote.

"inflation is not as alarming a phenomenon as it is being made out to be. [It's] merely [ ] a balancing act of the market."

Most commentators would not agree with this statement. Since the 1970s, western central banks have been given increasing power to tackle the problem which actually restricts growth, if not driving it backwards.

"The one solution to keep the ill effects of inflation at bay is to minimise one’s needs and allocate income for needs in a better way, says a student of economics at a reputed university in the Sultanate."

So you have to resign yourself to restricting economic development?

Inflation is "not one-sided. If there is a rise in price somewhere, there is a fall somewhere too. While the price of rice may be high, your mobile bill is not as much as it used to be earlier. Also, with a recharge for RO1, you can now speak for longer than you could talk, say, in January this year. Cell phones and electronic items are also becoming cheaper by the day."

Excuse me? Does that mean that all residents of Oman can dismiss the rise in the price of rice, and by extension, other foodstuffs, without worrying about the consequences? Does the cost of a call on a cellphone truly compensate for a diminished diet? It's the rising cost of foodstuffs that is contributing most to inflation in emerging economies such as Oman. Are all Omani residents so well cushioned against the effects of inflation that they can absorb increased costs of foodstuffs? Having reached their current high price levels, commodity prices are not likely to come down, even with increased supply. It's just that the rate of increase in price will slow down with increased supply. UN warns about rising food costs

How to get out of this impasse? Well, Gulf News reported on 26th May that the US had hinted that it might countenance revaluation of the Gulf currencies. A US Treasury report to Congress on International Economic and Exchange Rate Policies (FX manipulation report) hinted at a potential US nod for currency reforms in the Gulf.

"The US recognises significant appreciation pressures on the Gulf Cooperation Council (GCC) countries. From a fundamental standpoint, we believe the US authorities have hinted that there is a need for more exchange rate flexibility," said two currency analysts of Merrill Lynch.

It's a chink in the armour of the US treasury.

How long will it take for the US Treasury to relax its grip on the economies of the Gulf states?

"If any country is found to be a currency manipulator, it is required to hold talks with the US government."

So, Tmes of Oman, inflation isn't a temporary glitch.

Pulling in your belt and going hungry isn't going to make an iota's worth of difference. Lobbying the US treasury might. But who holds the power?