I don't dispute the rest of Roubini's statement, but I question the part you have highlighted. Why should we assume that the Fed (and treasury) would be unaware of the monster bubble they are creating? Why should we give them the benefit of any doubt? Because they didn't see the housing bubble pop and are generally incompetent? Or because they would never do such a dastardly thing as blow another bubble? Bill Fleckenstein has referred to Alan Greenspan as a serial bubble blower. The Fed's MO is to do nothing to prevent bubbles from occurring and then in the process of cleaning up the destruction a bubble makes, to create a new one. Some have said that Ben Bernanke has two functions: to adjust interest rates and to print money. He has been printing money for the last 18 months. He is using inflation in the money supply to juice the economy--just as Greenspan did in 2002-4. The dollar also lost a lot of value back then and gold nearly doubled. That's what Bernanke wants, apparently...for people to spend and get rid of dollars like hot potatoes. He wants velocity to rise. Bernanke is a mad scientist conducting an experiment. Eventually the economy will scream.