That fact, combined with Europe's dependency on oil and other commodities, will result in higher inflation in Europe -- i.e., higher inflation despite an ECB interest rate hike.

Chandler grants that there are other factors besides the weak and falling dollar that are increasing inflation in Europe, and in the United States, as well, but there's "incontrovertible evidence that energy prices and other commodity rises have pushed up inflation by at a percentage point or so" on both sides of the Atlantic, he said. The commodity-based inflation is looking eerily similar to the 1970s stagflation period, also characterized by record oil prices and rising commodity prices.

The best inflation fighting policy for now? Chandler says if the ECB maintains present interest rates, and the U.S. Federal Reserve begins to raise rates slightly, "the dollar will begin to recover, commodity prices will ease or even drop substantially, and Europe's inflation will fall," Chandler said. "It should be the ECB policy for at least the next two quarters. The sooner everyone recognizes this nexus between the falling dollar and rising inflation, the sooner we're going to come to grips with it."

Economic Analysis: Let's hope ECB President Jean-Claude Trichet is listening. Economist Chandler makes a strong case that a high-interest euro currency is only going to push the dollar even lower, helping to push commodity prices, including oil, further into the stratosphere. Conversely, Chandler's argument suggests a rate freeze by the ECB and a Fed hike or two would begin to reverse the dollar's slide. It's also a textbook example of why, in the globalization era, major central banks need to coordinate monetary policy, to the extent possible, to achieve the best possible outcome for the global economy.