A Fear That the Cure Could Be Poison

Central banks like the US Federal Reserve raise interest rates to slow an economy and lower them to stimulate it. But economists admit that a complex global economy, with transactions moving at rapid pace, complicates their task. Economist must wait for data to come in long after an economy reacts to events. For example, economists are yet uncertain about whether or not a recession is underway in the US. More worried about a downturn in the economy rather than inflation, the Federal Reserve promptly lowered interest rates twice during the first month of 2008. Global markets respond to the quick action, but uncertainty grows as investors recognize the lack of timely solid data. Every crisis offers economists new lessons on the dangers of excess. – YaleGlobal