The US Federal Reserve is surely the most powerful and misunderstood institution in the world. It was designed just over 100 years ago for one discrete task — to ensure that the country has enough money to keep the economy growing to its full potential.
But over that time it has come to backstop the global market system, and in recent years it has created a bubble in everything that is now, slowly but surely, starting to burst. As a consequence, the Fed is trying to walk an impossible line between managing the inflation it helped to set off and the recession that may follow as it tries to stabilise prices.
How did we get to this strange and untenable place? Some would blame it on the massive quantitative easing programme launched in response to the 2008 financial crisis, followed by the propping up of any number of asset classes after the pandemic.