Federal Reserve Chairman Ben Bernanke is currently in a position which I don’t envy.

On the left, prominent economists such as Joseph Stiglitz have slammed Bernanke for his policies on quantitative easing (QE2), which Stiglitz correctly predicted could cause asset bubbles.

On the right, Bernanke is getting hammered by lawmakers like Paul Ryan who want the power to audit the Fed. In addition, many other Republican-leaning economists and politicians are fiercely opposed to QE2 for the same reasons as Stiglitz.

However, Bernanke’s policies do deserve criticism and QE2 in particular is turning out to be a disaster. I have fiercely opposed QE2 since its inception. Many predictions of QE2’s harmful consequences weren’t pessimistic enough.

Since Bernanke began QE2, America has exported inflation to nearly every country in the world. China, India, the Middle East, South America, and even Europe, are all starting to feel the effects of inflation.

Although inflation is only a small factor causing the unrest in the Middle East, it is the straw that broke the camel’s back.

The only two major countries in the world that I know of that aren’t experiencing inflation currently are Japan and the United States.

However, the data for inflation in the U.S. is deceiving. Inflation is officially measured by the consumer price index (CPI). The measure has a high weighting toward home prices, and that is one of the reasons the CPI is so low.

Food and oil, two of the most basic products needed by nearly every citizen are excluded from the CPI.

Data on the Producer Price Index (PPI) released yesterday showed inflation is heating up. The PPI is up 9.6 percent on an annualized basis. This indicates large inflation from producers, which will eventually get passed on to consumers. On a positive note, the Federal Reserve also raised its forecast of GDP growth to a robust 3.4 percent to 3.9 percent.

Bernanke can’t undo the mistakes he made in the past but he can start making progress toward preventing rampant inflation reaching our shores.

It is time to make a symbolic move by raising interest rates slightly.

Interest rates have been at near-zero since late 2008 in an attempt to prop up the housing market. The housing market is still extremely weak, and it is highly unlikely lower rates will help.

Bernanke should make a bold move and increase interest rates by at least 100 basis points (1 percent) immediately to prevent inflation. This will likely have no effect on housing prices, but will show the markets that the Federal Reserve is serious about inflation.

Bernanke then must start preparing for inflation by raising rates further.

If Bernanke doesn’t act quickly, the inflation we exported to the rest of the world will be quickly imported back into the U.S.