2013-08-26 — washingtonpost.com
Their institutions, which prize their independence from politics, have found themselves more intertwined with elected leaders than ever: Witness the European Central Bank pledging to stand behind the finances of that continent's nations, or the Federal Reserve's deeper role overseeing the financial system following Dodd-Frank legislation.
And there are growing signs that the unwinding of the banks' trillions of dollars in interventions could be every bit as dangerous and volatile as the conditions that led them to take the actions in the first place. The mere hint that the Fed will slow the rate at which it injects new money into the system by buying bonds has driven a torrential sell-off of all sorts of assets this summer, driving U.S. interest rates up a full percentage point and prompting even bigger financial convulsions in emerging nations like India and Brazil.
"The biggest bubble of them all," said Vincent Reinhart, chief economist at Morgan Stanley, "has been the bubble in central banking."
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