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In a recent interview with Bloomberg, James Bullard, president of the St. Louis Fed, offered a blunt warning on America’s disastrous financial trajectory.

Lawmakers and investors shouldn’t take comfort in low U.S. borrowing costs because markets are often “complacent” about the risk from excessive deficit spending, said James Bullard, president of the Federal Reserve Bank of St. Louis.

When it does blow up it will be too late,” Bullard said in an interview last month in New York. “When markets lose confidence in the U.S. and say that they don’t trust us any more, rates will skyrocket and the crisis will be upon you.”

He’s right, of course. Interest rates can’t stay low forever. If (when) the world does start to lose faith in America’s ability to reign in spending and cut debt, things could get crazy for a while. And quickly.

Mr. Bullard points to Greece as an example. Just a year and a half ago, the Greek 10-year yielded around 5.5%. Today that number is closer to 17%. 18 months later.

Trying to raise more debt at those levels would be ludicrous. Like trying to run a national budget on a high-interest credit card. Unsustainable, impossible. Nobody wants to buy your debt, you’ve sold quite enough already. But thanks.

Could it happen in America? Sure. Will it? I don’t see how it’s avoidable, though the timing is hard to judge.

While it is somewhat refreshing to hear such talk from a sitting Fed president, let’s be real. It’s meaningless, and in actuality Bullard is just one of the more hawkish doves. Hoenig’s on the way out, and he was the closest thing to a senior power-wielding “quasi-hawk” we had.

To say that most of Bullard’s colleagues do not share his concerns would be an understatement. And unfortunately, they’re the ones who call the shots.

Bill Dudley, ex-Goldman director and current head of the powerful NY Fed, who continually reassures us about the recovery’s “self-sustaining” nature, is among the uberly-dovish leaders.

By the way, isn’t it difficult to imagine how one could possibly, in any way, call the current economy self-sustaining? Self-destructive would work. But to say this recovery is organic in any way, as the central bank simultaneously injects historically-unprecedented amounts of liquidity into the market, is borderline moronic.

Interest rates are prices, and they are screwing with this fundamental aspect of the economy in a very dangerous way.

And they’re not just “juicin things up a lil” or “primin’ the pump a bit” at this point. They’re sloshing gasoline all over the place. Monetizing debt and devaluing the dollar at a frenzied pace. More fuel to come, right after they let things cool down for a little while. My guess: QE3 starts late fall, early winter at latest.

Dudley is only co-captain of the dove brigade, of course. He shares that honor with the Bernank and Janet Yellen, both dedicated printers with a natural, clueless optimism about them. And a knack for ignoring things that affect small people, like price inflation.

There are no extremists at the Fed. No major opposing schools of thought, or vigorously debated theories. Only varying levels of conformity, best I can tell. Those at the Fed who experience (much frowned-upon) bouts of “hawkish urges” are hopelessly outnumbered, and outgunned politically.

Source: Fed's Bullard: 'When It Does Blow Up It Will Be Too Late'