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Kudlow: Is Ben Bernanke Generating the Mother of All Bubbles?

Monday, 1 Oct 2012 | 7:20 PM ET
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In his attempts to stimulate the economy, has Ben Bernanke left investors facing the worst bubble of all time?

Many Republicans sure think so, they've been skeptical of the Fed policies with Mitt Romney clearly stating that if elected he would replace the Fed chairman.

Fiscal conservatives worry that the unprecedented bond buying programs have artificially manipulated the economy and the market and they say eventually it will all come crashing down like a house of cards.

Not only do opponents argue that the Fed has laid the groundwork for inflation they also say by artificially driving down interest rates, the Fed artificially drove demand for stocks higher.

Lee Munson, Portfolio Chief Investment Officer, tells Larry Kudlow that pros are buying stocks – because the feel like they have no other choice.

Bernanke Won't Let Stocks Fall Ahead of Election
Larry Kudlow looks at the impact of the Fed's bond buying program especially into the November election.

“I have an uncle who is accommodative his name is Ben and he’s going to flood the system and jack up the Dow.” That, Munson says is the prevailing sentiment on the Street.

Larry Kudlow and others worry that as a result, the market is in a terrible bubble and the pop will be substantial and wide ranging.

On Monday, Ben Bernanke defended the central bank’s bond-buying stimulus plan, saying its actions were necessary to support a flagging economic recovery.

He also said that while the country’s unusually weak economic performance had forced the Fed to resort to less conventional tools after bringing interest rates all the way down to effectively zero, the Fed’s goals of price stability and maximum sustainable employment have not changed.

Tune in:

"The Kudlow Report" airs weeknights at 7 p.m. ET.

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  • Lawrence Kudlow is a CNBC senior contributor. Previously, Kudlow was anchor of CNBC's prime-time program "The Kudlow Report"