The Wall Street Journal today muses over the possibility of $200-a-barrel oil.

In the U.S., $200 crude would push the price of gasoline to well over $6 a gallon, causing commuters to alter their driving habits more sharply than they have already, while putting extreme strains on large sectors of the U.S. economy. In Europe, it would stir more political unrest and increase the clamor to cut the continent’s stiff petrol taxes. In Asia, governments would be under pressure to cut fuel subsidies and risk a popular backlash.

There’s no consensus on where crude oil prices are heading or why they’re so high now. Are they going up? Are they going down? Are speculators responsible? Is it supply and demand? We don’t know. But we do agree with Bill Bonner when he says that high energy prices are facilitated a massive transfer of wealth out of the U.S. and into the hands of oil-producing nations…

T. Boone Pickens calls it the “greatest transfer of wealth in history.” He’s referring to the oil market, where Americans take money out of their pockets and use it to buy gasoline; the cash ends up in the hands of the oil exporters – notably Russia, Venezuela and the Arab states. But the transfer of wealth goes back further than today’s high energy prices…

It began with the easy money policies of the Fed following the crash of ’87…and the free-spending habits of the American people and their government. The more Americans borrowed and spent…the more money ended up in the hands of foreigners. Normally, the mountains of American cash building up overseas would have caused inflation at home and landslides in the currency markets. But Asian exporters could make things cheaper and faster than American manufacturers. This, combined with technological improvements and just-in-time inventory techniques, tended to hold prices down. Prices looked so stable, central bankers thought they were geniuses and continued to pump out cash and credit. Then too, the strangers were exceptionally kind; normally they would have dumped their dollars on the world market – provoking a currency crisis. Instead, the Asians lent the cash back to the US – thereby giving Americans even more rope to hang themselves. They could use the credit to buy more stuff – from the Asians. They didn’t need more stuff. They didn’t need bigger houses. And they didn’t need big SUVs to drive them to distant jobs and shopping malls. But that’s what over-reaching is all about – buying things you don’t really need with money you don’t really have.

Gradually, the Chinese developed more industries and more infrastructure. Soon, they were competing not merely on price…but on quality too, just as the Japanese had before them. And then, as they accumulated more and more money, they began to compete with the developed countries not only far raw materials – but for food. First, the price of oil shot up. And then, Americans (and Brazilians) tried to replace fossil fuel with fuel made from corn and sugar cane. This pushed up the price of grains. Corn has risen 64% in 2008 alone. Soybeans are up 37%. Oil itself is 50% more expensive. (Yesterday’s trading left it unchanged – at $144 a gallon.)

“This whole economic phase is about taking Americans down a notch,” we told a friend over a glass of wine yesterday afternoon. It really is a classic case of imperial over-stretch…where Americans reached too far…spent too much…borrowed too much…and lived too high. Now, they’re facing a major correction – with falling living standards, falling wealth, falling power, and falling prestige. There’s no way out…the best they can do is to take their medicine as gracefully as possible. There are no magic levers Ben Bernanke can yank. No miracle knobs he can turn.

We should add that it’s not only Americans who are being taken down. The British too are facing a correction of their own.

“British economy falling into an American-style slump,” says the headline in the International Herald Tribune.

No wonder. The Brits borrowed even more than Americans and now have more debt than we do.