03/02/2011 09:28 am ET Updated May 25, 2011

When Ben Bernanke Comments on Oil, Watch Out Below

When it comes to public officialdom we are sadly blessed with a plethora of functionaries who just don't get it, leaving us to foot the tab for their lack of judgment or worse. Blind spots seem embedded in some of these functionaries and on the job experience seems to count for nil.

Here we have Fed Chairman Bernanke, seemingly oblivious to his past performance on the relationship between oil prices and the economy's well being. Only yesterday he instructed us that the sharp recent increases in oil prices are unlikely to hurt the U.S. economy. To cover himself he added a lame disclaimer "unless it is sustained". ("Rising Oil Prices Don't Threaten U.S. Economy" Reuters 03.02.11)

Feel better now, even though the stock market tanked in reaction to his words, evidencing in real time the economy's confidence in his stewardship and ability to "get it"?

Ominously we had the pleasure of Mr. Bernanke's insights on oil once before, and it wasn't a pretty experience. On June 5, 2008 Mr. Bernanke spoke at his alma mater addressing Harvard's senior class. Quite incredibly he dismissed the idea that rising oil prices posed the same kind of threat to the economy than the wage-price spiral of the 1970's. Wha?? (please see "Oil's Largest One-Day Gain on Record: Thank You, Mr. Bernanke"). Largely in response to Mr. Bernanke's Harvard address oil had its largest one day jump on the commodity exchanges. It's price spiked $6.08 a barrel. And why not, with the Fed Chairman's whitewash of high oil prices, the sky was the limit.

A very few weeks thereafter we saw oil rise to $147 a barrel, the highest ever, sending ripples through the economy that facilitated the journey to September 2008 and its financial meltdown.

How fortunate we are in these difficult times that we have such visionaries at the helm as Mr. Bernanke