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The Fed faces a huge dilemma. US debt is now running at around 130% of GDP, and has reached the point where interest payment is now greater than total federal tax returns. All US taxes, and more, could be spent on servicing debt, with nothing left for infrastructure, federal employee salaries, defence, education, etc etc. Most people see the Fed's choice being recession or not, however it is really between defaulting on debt payments and treasury spending or loosening policy into an inflation spike to inflate the debt lower. If the Fed does tighten policy, it will do so at a time when it can't even cover interest payments, which will lead to high volatility, an increase in the USD value and the near certain selloff of much of the USD12Trillion in equities owned by foreigners as they scramble for USD. If it loosens policy and delays tapering QE, then inflation will accelerate, the USD drop, and the bond market remain in the doldrums, however it will be able to continue servicing its debt payments. Indications suggest it may initially try to taper QE before hiking interest rates, leading to a stronger USD and deflation, however this would likely be reversed fairly quickly, as the US can't afford to have the world lose confidence in the trustworthiness of its bonds, which any defaulting on interest payments would certainly do. Chinese bonds have already overtaken US ones in terms of foreign buyers, with the Fed being the main buyer of US ones by far. The trillion dollar question is what will they do, and when? A lot of money will be made or lost on that question. It's no coincidence that many governments have been buying gold in large amounts lately - including Thailand. Additionally, Russia is accepting gold in payment for its gas exports, and is immediately converting USD to gold when paid in that currency. Saudi too, is accepting a mixture of RMB and gold from its biggest oil buyer - China, putting an end to the supremacy of Petrodollars, so it's not too hard to see how central banks see things playing out. The exchange rate worries of a few expats in Thailand really matter nothing to the far larger issues going forward.