Naked Capitalsim has the article The Fed’s Dereliction of Duty and False Capital Flows Morality.

Yves here. As a result of the US’s push over decades to make the world safe for America’s investment bankers, capital flows across borders easily, and some top experts contend, too easily. Carmen Reinhart and Ken Rogoff, in their work on 800 years of financial crises, found that high levels of international capital flows were strongly correlated with more frequent and severe financial crises. In 2011, Claudio Borio and Piti Disyatat published an extremely important analysis of the crisis which shredded the Bernanke “global savings glut” thesis. It instead found that the culprit was excessive financial elasticity, which basically means deregulation and the resulting high level of cross-border capital flows.

While I have been focusing of late on the uselessness of monetary policy easing when fiscal stimulus is what is needed (just as explained by John Maynard Keynes), I have been ignoring the international impacts. The above article is a good resource for getting my attention back on these important issues.

What is truly galling about the situation is summed up in the closing comments.

Moreover, this tale of financial volatility may have a different moral than the usual one: bad things can happen even to those who follow the rules.

So even if you don’t want to participate in this risky game, there is little you can do to protect yourself except try to have enough of a cushion to survive the inevitable trauma.