Federal Reserve Chairman Ben Bernanke and Wall Street economists continue to claim that inflation in the U.S. remains under control.

They claim that investors shouldn't be concerned about rising oil prices — even though actual inflation is rising at a disturbingly fast rate.

In contrast, European central banks readily admit that inflation throughout Europe is a big concern. For example, in an interview yesterday, European Central Bank council member Klaus Liebscher said the bank remains focused on rising inflation risks.

More specifically, Liebscher said, "risks to price stability are clearly pointing to the upside" and "rising oil prices are also increasing these risks to price stability." Liebscher also said that rising food prices are a concern.

Bank of America's chief European economist expects inflation in Europe to accelerate to a 2.7 percent annual rate next month — well above the European Central Bank's (ECB) comfort zone of around 2.0 percent.

In light of these inflationary pressures, I expect the ECB, which sets monetary policy for the 13-country Eurozone, to resume increasing short-term interest rates by the end of this year. Look for the U.S. dollar to continue its decline against the euro.

If the dollar does continue to fall, the Federal Reserve will be forced at some point to admit that inflation here is also getting out of control. Hence, the Fed may need to reverse course and begin raising short-term interest rates again by early next year.

Or, as I mentioned in an article I yesterday, the U.S. Treasury Department may be forced to intervene in foreign currency markets in an effort to stave off the dollar's descent. Either of these actions would have severe implications for the U.S. economy.

An unexpected hike in short-term interest rates would likely lead to a big drop in U.S. stock prices, while any efforts by the Treasury to inflate the dollar would result in a decline in U.S. exports. That's because American exports would become more expensive to foreigners.

In chess terms, the "check" into which both the Federal Reserve and the U.S. Treasury Department have cornered themselves bodes very well for those of you who have subscribed to our new investor service — The ETF Strategist.

This service focuses on exchange-traded funds that are likely to perform well in any investment environment — whether stock prices in general are going up, down, or sideways. In fact, even though stock prices in general fell for the second day in a row yesterday, six out of eight of our current ETF recommendations rose.

Several of those ETFs advanced again today, while the major stock market indexes fell again.