Extraordinary global vulnerability

Today, however, the world economy is more fragile than ever since World War II. Despite cyclical recovery, Europe's growth is sustained by zero-bound rates and quantitative easing. In Japan, Abenomics has contained contraction but not stagnation.

As the Chinese economy is rebalancing, it cannot boost global growth as before. India's prospects have brightened in the Modi era, but growth remains below potential. And while Russia suffers from the West's misguided sanctions, Brazil's contraction has worsened.

Premature rate hikes could fuel the US dollar's sustained appreciation, which will contribute to external crises in emerging economies with soaring foreign currency debt and sharp exchange rate depreciations.

Since oil and commodities remain denominated in dollars, a premature hike may cause low-income resource producers to suffer a triple-whammy - growth contraction, dollar pressures, and exports decline.

Without traditional defenses

Internationally, the aftermath of the Great Recession has forced major central banks in the West to live with zero-bound interest rates. Consequently, premature hikes will occur at a time when these banks lack most of their traditional defenses.

The Fed's actions have global consequences, but no mandate for international accountability. What the world desperately needs is truly global governance and a basket of multiple reserve currencies.

As China will soon host the G20 meetings and the IMF will discuss the role of renminbi as an international currency, change is in the air. Meanwhile, misguided Fed decisions could contribute to a potentially huge storm, which we all must face without lifeboats.

Dr Dan Steinbock is the research director of international business at the India, China and America Institute (USA) and a visiting fellow at the Shanghai Institutes for International Studies (China) and at EU Center (Singapore). For more, see http://www.differencegroup.net

A slightly shorter version of the commentary was released by Shanghai on November 12, 2015