“...critics have said the increased money supply and low interest rates during his tenure at the Fed from 1987 to 2006 led to bubble investments.”
Take it from someone that was on the front lines of the housing bubble...increased money supply and low interest rates were the EXACT reason the bubble expanded and exploded (well, if you don’t include greed).
Most people are not going to purchase a home with 100% financing (or even more), and feel any remorse at walking away from the home/loan if things go sour.
Teaser rates, subprime mortgages and other lending chicanery proved to be too much for the low-economic-info homebuyers, and they were swept up into the massive clarion call of “everyone has a right to own a house”. Anyone that could fog a mirror, was told where to sign and Voila!...they were homeowners.
When the realty sunk in, and the newly anointed homeowner was faced with making a house payment or buying that widescreen TV...guess which one lost?
Greenspan babysat and watched that situation unfold...for years...and did nothing about it.
Greenspan did worse than nothing. He inexorably undermined the dollar causing people to convert their dollars into bubble investments. He did that in the name of "stimulating" the economy, but all he did was fuel various unsustainable consumption binges and commodity bubbles.
Bernanke is doing the same and essentially preventing and dissuading people from committing dollars to long term investments. Even worse Bernanke is printing money to buy treasuries which only enables the politicians to continue their consumption binge which is arguably even less sustainable than Greenspan's consumer-led binges.
The case of consumers consuming houses was made possible by ridiculously low rates that failed to account for the lack of creditworthiness that those consumers had. There were diminishing job prospects except within the real estate bubble and related industries, there was the inflated prices themselves leading to a diminishing supply of greater fools, and there was imminent inflation which is only being staved off by normal post-bubble deflation.
In the case of politicians consuming America's capital and resources, there is no conceivable way that we can pay back our debt either by raising taxes or reducing spending. The interest rates that the US pays are currently a small fraction of the rate we should pay based on our country's prospects (sliding into socialism), based on the undermining of the dollar, and the end of the supply of greater fools (e.g. Japanese) for our debt.
Over the long run it's the undermining of the dollar by both Greenspan and Bernanke that does the most damage. It prevents and dissuades people from making long term beneficial investments in favor of short term speculation in various bubbles.