Should Financial Rescues Be Left to an Elite Club?
The Fed provides a vital lifeline for the global economy. Some are now questioning whether it’s straying into foreign policy.
Members of the world’s most exclusive club.
Photographer: David Paul Morris/BloombergNext time the world needs saving, keep it on the downlow. For all the attention given to US President Donald Trump’s efforts to bludgeon the Federal Reserve into making big interest-rate cuts, a potent weapon in the monetary arsenal gets scant attention — perhaps by design.
When the Fed wraps its arms around the global economy, as it has a few times this century, officials wrestle with acute tensions. They derive mandates from the American political system, yet to protect the domestic economy, they need to act outside its borders. Shoring up nations far from home needs to be done quickly, preferably in a discreet manner. This might appear undemocratic, though it’s probably for the best.