I’ve assumed all along that the current Fed chairman was secretly frightened, as well he should be, of the catastrophic risk of a debt deflation. He didn’t get the nickname ‘Helicopter Ben’ for no good reason, you know. But maybe I’ve had the guy pegged wrong? His speech on Wednesday ignored deflation’s grave risk to the U.S. and global economies yet again, focusing instead on the dreaded possibility that ‘ so to speak ‘ the price of a dozen eggs might rise by 12 cents sometime in the near future. And, as if to prove that not all of the lunatics are closeted away in asylums ‘ some of them, it would appear, hold very important jobs in the global banking system ‘ Mr. Bernanke put yet a little more distance between himself and reality by citing a supposed scarcity of skilled workers and accelerating labor costs that could pose a further risk of inflation.

That would certainly be news to America’s workers, who have been steadily losing ground to inflation for the last thirty years. Is the Fed chief perhaps confusing assembly-line workers with professional athletes? As you know, these days even a mediocre outfielder who hit .230 last year and drove in 15 runs could probably cajole a $10 million contract from a second-tier team. But are there enough mediocre outfielders to skew wages higher for the entire U.S.?

Worse by Summer

Whatever the case, Wednesday’s speech appears to have diminished the likelihood that the easing I had predicted here just a month is imminent. And if that is the case, one shudders to think of how it might affect an already depressed housing market. I’d said mortgage rates would need to fall to record lows of under four percent to kick off a new boom. Instead, with nary a feint toward stimulus, we are practically assured of seeing the real estate bust turn into something even worse by summer.

I honestly can’t figure out what the heck kind of ‘inflation’ the Fed chairman is talking about. Tally up every dime of every CPI price-rise of the last five years and you would come up with a figure that pales in comparison to the asset inflation that has kept Americans spending money they don’t have. Surely Mr. Bernanke, in his role as Chief Obfuscator of the banking system, is just tossing out another red herring? For the sake of the country’s mortgage borrowers, and for that of borrowers-to-be, we surely hope he was merely attempting to distract us from the real problem.