This is why you shouldn't take the Fed at its word

 Bond yields have been driven to record lows as a product of massive quantitative easing. In terms of valuation, the 30-year treasury bond now yields less than core inflation, a very rare extreme.

If by “historical norms” Ms. Yellen is referring to just the past 20 years of Fed-induced asset bubbles then yes, asset values aren’t necessarily “out of line.”

I think she knows better. The past 20 years are a historical aberration culminating in a financial bubble that is now more pervasive than anything we have ever seen before. It’s not just stocks or bonds or real estate this time; it’s all of the above. I am certain she hopes the Fed can engineer a “permanently high plateau” simply because it’s too difficult to imagine otherwise. But students of history understand that there is no amount of ‘frequent repetition of falsehoods’ that can overcome the truth.