Federal Reserve

How ZIRP created the global bubble and raising rates popped it.

"The U.S. dollar (USD) is the global economy’s primary reserve currency. When the Federal Reserve lowered interest rates to zero (Zero Interest Rate Policy, ZIRP), it weakened the dollar relative to other currencies. In this ZIRP environment, it made sense to borrow dollars for next to nothing and use this free money to buy bonds and other assets in other currencies that paid higher yields. Many of these assets were in emerging market economies such as Brazil.
As a result of this enormous carry trade, an estimated $7 trillion was borrowed in USD and invested in other currencies/nations.
Once the Fed started making noises about “normalizing”/raising interest rates in the U.S. (i.e. signaling the markets that a trend change was at hand), the dollar strengthened and the carry trade started reversing: those who had bought assets in other currencies with borrowed USD started selling those assets, which pushed emerging market currencies and markets off a cliff."

Great.