Smog Says, Don't Trust the Dwarves

Bilbo is shocked. How does he know about the dwarves? I have dwarves, what? And he says, I know the smell of the dwarves, right? So the dragon can smell the dwarves. The Dragon has this kind of mind control ability of lying and deceiving. He's really clever at propaganda. He's good at mind control. It actually works a little bit because Bilbo realizes, yeah, how am I going to get all of this treasure back to my home?"