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By their logic, lax monetary policy is solely to blame for emerging inflation in Asia, and rising protectionism and asset bubbles in emerging markets.
As Robert Hall, an economist at Stanford University, notes, earlier recessions, like that of the early 1980s, were caused by the Fed raising interest rates sharply to squelch emerging inflation and holding them high even once the recession began.
Growth of output has remained vigorous, unemployment is lower than it has been in nearly 30 years, and yet, despite the tautness in labor markets, there have been no obvious signs of emerging inflation pressures," Greenspan said.
Without a shred of data to back up its assertion, USA Today warned that the surprisingly good jobs report of October 3 could lead the Federal Reserve to increase base interest rates sooner than the financial markets expects in 2015, despite the absence of any evidence of emerging inflation.
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In many of the fast-growing emerging nations, inflation pressures and rising interest rates are adding to investor nervousness.
If the United States is indeed behaving more like an emerging market, inflation is far easier to manufacture.
In the emerging markets inflation is the big problem, particularly in China (see chart).
But Mr. Bernanke suggested that "if economic and financial developments were to require a more rapid exit from the current highly accommodative policy" that is, if fears emerge about inflation the Fed "could increase the interest rate paid on reserves at about the same time it commences significant draining operations".
He explicitly stated that if signs emerge that inflation is picking up, he will go in for an interest rate hike.
There is little sign of inflation emerging for now.
The story is entirely different for emerging markets, where inflation rises sharply as debt increases.
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CEO of Professional Science Editing for Scientists @ prosciediting.com