How the Fed Is 'Shaking the Entire System'
About this episode
Klein talks with Columbia economic historian Adam Tooze about the fragile global economy of October 2022, when the world's central banks were raising rates in the broadest tightening cycle of the modern era. Tooze warns the Fed's fight against inflation is putting severe stress on the global financial system and could trigger a harsh global recession, pointing to the U.K. bond-market spasm after Liz Truss's budget. They discuss how a strong dollar crushes emerging markets, the concept of 'polycrisis' — overlapping shocks from energy prices to climate disasters — and the devastating floods in Pakistan and South Asia's competition with Europe for natural gas. Tooze defends the Fed's initial caution, argues it was bullied into hawkishness, and calls for debt relief, bolder IMF and World Bank action, and central-bank coordination instead of relying on rate hikes alone.