Fed Chairman Bernanke stated today that he doesn't see any asset bubbles "in the U.S." and asset bubbles that the Fed's policies create in other countries aren't the Fed's problem.

Federal Reserve board chairman Ben Bernanke said he did not see any asset bubbles emerging in the United States. "We do not see, at this point, any extreme mis-evaluation of assets in the United States," Bernanke said in testimony to the Senate Banking Committee. The Fed's monetary policy is aimed at the domestic conditions, he noted. If foreign governments see bubbles in their economies, they have to use their own monetary policy and other policy tools, Bernanke added. "It is really not the United States responsibility to make sure there are no misalignments in every economy in the world when those countries have their own tools to address them," Bernanke said.

This is priceless.

No asset bubbles in the U.S.? How about the stock market rallying 60% in less than a year based on profits obtained primarily from cutbacks? How about oil and other commodities based on the weakening of the dollar caused by the Fed's printing of trillions of dollars? And if the Federal Reserve and the government's policies really are going to work, then gold (now topping $1200 an ounce) is a bubble, too--the only way gold isn't a bubble is if we assume that current monetary and fiscal policy are heading us towards a dark future.

Aside from the bubbles we arguably have in the U.S., the assertion that asset bubbles created in other countries by the Fed printing trillions of dollars isn't our problem is naive, arrogant, and dangerous.

First, it's naive. Even childish. It's like driving a semi through a city at 100mph and then saying that the people you run over are responsible for getting run over, because they had the tools to get out of your way.

Second, it's arrogant. This is an apparent response to Hong Kong and other countries questioning the size of the U.S. stimulus, and expressing worry that the flood of dollars is creating asset bubbles in their countries. Bernanke just told the world that is flooded in dollars, "Screw you! You deal with the mess we're exporting."

Third, it's dangerous. Lest we forget that we are in the midst of a global financial crisis. While it's true that the Federal Reserve is concerned with domestic policy, it can't ignore the fact that it's the most important and influential central bank in the world. And asset bubbles forming and collapsing in foreign countries can and will come back to harm our own domestic economy.

The U.S. dollar is still the reserve currency, but statements such as this are not going to help the dollar retain that status. Foreign countries that hold dollar reserves have a vested interest in the value of our dollar. Bernanke can tell the world to absorb our flood of dollars and tell them that he doesn't care about anything outside the U.S., but that will not create confidence in the Federal Reserve, the value of the dollar, or the United States.