We know there is no way the US and Europe can repay all their debt and fund pensions etc, therefore they have to inflate at some point, there is not option.

However, with all the inflation targeting that goes on, particularly on this side of the pond, it going to be hard to sell to the public ("Err... I know we said 2% inflation plus or minus 1% but... err... we cocked up and inflation is now 25% but we are going to keep rates at 5%..."etc). So, they need a scapegoat to justify higher inflation and why they aren't going to do anything about it.

It has to be Peak Oil doesn't it? I mean when that really kicks in and oil goes to $200 a barrel and higher, they just say it's an external factor we can't control and adjust the core rate to remove the effects with some cobblers mathematical justification. In the meantime the price of everything goes up at 20-30% pa, nominal wages (and hence tax revenue) are allowed go up in tandem while paper currencies depreciate against anything real and entitlement increases are held to the bogus core rate.

All the ordinary folks are stuffed and the "smart money" has used the current enginneered sell off to shift into gold, ranches in Paraguay and any other hard assets they get their hands on. Anyone noticed that there is an awful lot of paper money being salted away in the big banks but none of seems to be getting lent out yet? Maybe they're deliberately delaying the start this inflationary avalanche until they have the cover of Peak Oil to deflect the blame?

We're going to look really smart in a couple of years (or maybe I've finally lost my mind).