After a January in which emerging-economy fires blew smoke into investors’ eyes, markets are calm again. Somewhat dovish noises from Janet Yellen, the new chair of the U.S. Federal Reserve, have, at first, reassured. But there are good reasons to worry.
Ms. Yellen said volatility in global markets did not pose a substantial risk to the U.S. economic outlook. The exclusively domestic line is globally unpopular, but too much Fed concern for the world can have bad effects at home. Crises in Asia and Latin America helped push Alan Greenspan to three interest-rate cuts in late 1998. U.S. Internet stocks rocketed, and then crashed, damaging growth. The Fed is trying to learn from burst bubbles’ past.