This is especially worrying because it means that, despite holding its own rates to record lows and feeding money into the economy through quantitative easing, the Bank of England is ever less able to offset tight fiscal policy with loose money.
The central bank, which has kept interest rates high to offset lax fiscal policy, is in a policy bind: even higher rates might attract a destabilising amount of speculative capital, while lower rates would fuel domestic demand and imports, pushing the current-account deficit higher.
If it does nothing, the Fed runs the risk that, when Wall Street does eventually fall, inflation will be rising and the dollar falling, making it harder to ease monetary policy to offset the effects of a crash.