While Ben Bernanke sweats out his pending confirmation in the Senate Banking Committee hearings in hopes of hanging on to his second four-year term as the country's Federal Reserve Chairman, others are anxiously eyeing the possibility of another bubble forming on the horizon.

Last month we gave you a preview about this topic in our posting,Bubble, Bubble, Toil, and Trouble. It included some dire predictions from Nouriel Roubini—he believes that investors are "chasing commodities" and creating a situation where asset bubbles can emerge when stock and commodity prices surge amid record-low interest rates.

We've also covered the whole history of financial bubbles in our book, The Big Gamble. It's all there in black and white and in plain view, so none of us can claim that we weren't informed, or shall we say, forewarned.

Now it's becoming increasingly clear that this bubble subject isn't going away any time soon.

The Fed openly admits that the current shaky recovery is not robust or quick enough to fuel job growth. Therefore, their answer is to continue holding down interest rates until the recovery gains traction. The growing concern is that these record-low interest rates (zero to 0.25 percent) could be sparking unrestrained financial market risk-taking and feeding the next speculative bubble.

While the short-term rationale to keep rates low makes some sense, we wonder about the long-term consequence. Experts predict that it's going to take five or six years before we see things reach stability in both the economy and the job market.

We've all heard the blustering and posturing about stiffer financial regulations and big pending policy changes to prevent future meltdowns. We just haven't seen much tangible evidence of it. While Bernanke hasn't faltered in his preference for regulations, his views about one thing have changed.

In the past, the Fed took a hands off approach to financial and asset bubbles. They were deemed too difficult to spot or, if identified, were best left alone. The belief was that raising the interest rates to slow the growth of a bubble might stunt growth in some other part of the economy, like causing inflation. But now Bernanke admits that these bubbles are indeed problematic for the monetary policy and that the previous solution—just waiting for them to burst and then mopping up afterwards with low interest rates, hasn't worked. Well, we're glad he's at least paying attention now.

But when the Senate Banking Committee put Bernanke's feet to the fire about Roubini's comments, Bernanke responded with, "Mr. Roubini is very pessimistic about the economy." Hmmmmm, could there be a reason for this pessimism?

Bernanke says he wants to use his powers as a bank regulator to stamp out bubbles. But as we listen to him speculate about his perceived role in solving our economic problems, it conjures up images of a knight riding in on a white horse and thrusting his trusty lance through every pesky bubble he encounters along the way. There is much hinging on the outcome of these Senate Banking Committee hearings for him to get too comfortable with that illusion.

Some on the committee are considering stripping the Fed of its regulatory power. And there is already legislation pending in the House that would bring interest-rate decisions under closer scrutiny by the Government Accountability Office, an investigative arm of Congress. It's not clear whether any of this will actually come to pass.

Meanwhile, no one at the Fed has expressed any desire to raise interest rates to stop the next bubble, but the idea is starting to gain some momentum. One of the main obstacles is—as astounding as this is to hear—economists actually have no viable model for determining how much interest rates should be hiked to offset the excessive asset prices that create bubbles. No viable model!? Isn't having a model basic economics?

It seems to us, that if we are trying to control this vital aspect of our economy without having any model or viable roadmap to follow, we're just pulling the levers of power while wearing a blindfold. Bernanke, the main man pulling the levers, when asked if he thought that stamping out a bubble by using higher interest rates would forestall a rise in inflation or stabilize the economy, simply answered with, "We'd have to think about that very seriously." OK, while he's busy thinking about that very seriously, fasten your seat belts, folks! We're in for a long bumpy ride!