Alan Greenspan, who warned of “irrational exuberance” during the dot-com bubble of the 1990s, said Wednesday that Wall Street is in another bubble. Two, in fact.

“ “There are two bubbles: We have a stock market bubble, and we have a bond market bubble.” ”

“At the end of the day, the bond market bubble will eventually be the critical issue,” the former Fed chairman said in an interview with Bloomberg TV.

“For the short term it’s not too bad,” Greenspan said. “But we’re working, obviously, toward a major increase in long-term interest rates, and that has a very important impact, as you know, on the whole structure of the economy.”

Greenspan, who led the Fed from 1987 to 2006, cited the growing federal deficit as the reason behind the bond bubble, and said he worries that raising interest rates too quickly will fuel inflation.

“We are dealing with a fiscally unstable long-term outlook in which inflation will take hold,” he said. “In fact I was very much surprised that in the State of the Union message yesterday all those new initiatives were not funded and I think we’re getting to the point now where the breakout is going to be on the inflation upside. The only question is when.”

Add meager productivity growth and a falling dollar, and “we are working our way towards stagflation,” he said.

Earlier Wednesday, the Fed said it expected inflation to rise to about 2% this year, hinting that it will likely raise interest rates at its next meeting in March.