With the nation’s financial infrastructure crumbling before our very eyes, the country’s top two economic policymakers made their way to Congress last week for an extraordinary episode of political theater.

As oil whipsaws its way toward the unheard-of-level of $150 a barrel (crude closed at $134.60 yesterday, extending a multi-day skid, but traded above $147 as recently as Friday), Americans are finally responding to the pressure of higher gasoline prices and have downshifted their consumption.

Editor’s Note: There is nothing the US Treasury can do to prevent further losses for the dollar, says Peter D. Schiff, not when the Fed’s policy on inflation is firmly guided by fantasy.

Throughout history, governments have always used crises to justify blatant power grabs. All too often, the “expanded government powers” that resulted from the moves remain in place — even after the crisis subsides.

What few economic leaders have acknowledged is that the Federal Reserve itself is responsible for the real estate and credit bubbles, which are the source of our current troubles. By keeping interest rates too low for too long, the Fed ignited a speculative fever and engendered a disregard for risk management that pushed asset prices above rational levels.

Ever since Robert Rubin began the tradition in the mid-1990s, it has been a significant element of the Treasury Secretary’s job description to continuously state that a strong dollar is in the national interest.

It’s unfortunate that the U.S. Supreme Court, in its ruling last week that U.S. currency is unfair to the blind, did not make the next logical step and declare it unfair to everyone who buys gasoline.

As China grapples with the consequences of its devastating earthquake, it finally also has begun to confront the destabilizing forces that are bubbling up from beneath its economic landscape.

For those holding out hope that the American economy can miraculously avoid a long and deep recession, consumer credit is often viewed as the wonder drug that can cure all manner of economic ills.