Can Powell’s Fed Afford to Ignore Geopolitics?: Eduardo Porter

As Tyler Cowen put it in a columna few years ago, the Latin American debt crises triggered by US interest rates that Volcker hiked to nearly 20% in 1980 and 1981 amount, by some measure, to “the worst financial disaster the world had ever seen.” In 1980, the region’s GDP per head exceeded the world average. By the end of the decade it amounted to only 85%.

The Federal Reserve is, again, chasing inflation that rose last year to its highest level since the Volcker era. As it raises interest rates at the fastest pace in over 40 years, ...