GUATEMALA CITY -- Misguided central-bank policies are wreaking havoc around the world. From Seoul to Washington and back, central bankers have forced down short-term interest rates in an orgy of monetary promiscuity.
The most obvious example -- which has also been the most damaging -- is the role of the U.S. Federal Reserve System in engineering what is shaping up to be a dollar crisis. With U.S. interest rates kept so low, domestic markets were flooded with cheap credit that overflowed into international markets that became awash with dollars.
And so it is that South Korea's economy is laboring under the effects of a wicked combination of ill-advised policies. Politicians and central bankers have acted under the illusion that they can conjure up economic growth through deficits or cheap credit.