Fed Has No Backup Plan for Economy

Fed Has No Backup Plan for Economy

AP Photo/Jacquelyn Martin, File

The doubt over an increasingly tenuous Chinese economy exacerbated by several rolling downgrades of the yuan last week in Beijing has investors and central bank officials on edge.

Given its central roll in global exports along with pride of place in international stock markets, the devaluation of the currency has experts calling for drastic action to forestall a broader global recession.

That dialogue among leading economists has included finger pointing, largely at the Federal Reserve and Chairman Janet Yellen, for its lack of response to what is being called a crisis in the making.

According to critics, the Fed is exploring new options for how to respond in the face of a potential recession, but with QE having already been exhausted few options are left on the table.

Prior to the Chinese fallout this summer, reports indicated that the Fed has strongly considered raising interest rates for the first time in almost a decade. But, should the Chinese crisis extend to global markets, few have any idea how Yellen and her colleagues might prevent ill effects on the American economy.