This morning, Ben Bernanke delivered an address to an international monetary conference in Barcelona via satellite. His message was mainly one of optimism laced with caution.
One of his cautions was this: That inflation could be a self-fulfilling prophecy. Yahoo News reports on the idea behind inflation as self-fulfilling:
If consumers, investors and businesses believe inflation will continue to go up, they will change their behavior in ways that aggravate inflation, turning it into a self-fulfilling prophecy.
Were consumer prices to keep climbing over a sustained period, that might “lead the public to expect higher long-term inflation rates, an expectation that could ultimately …read more

As if we weren’t already worried about a recession. Yesterday Ben Bernanke made it clear to Congress that we are in an economic “freefall.” Joy. He even said that some of the smaller banks may fail (the large banks have bailout money and cash inflows from wealthy benefactors).
Don’t panic. Take a deep breath. And get your personal finances in order.