The Federal Reserve acts, the world shakes. Or so it seems. The Fed's decision last week to "taper," or reduce, its effort at economic stimulus, has personal and global implications. Here's how.

Just as what goes up must come down, "The stimulus program was supposed to boost spending going in, so it's going to reduce spending going out," economist Peter Morici is quoted as saying in this look at tapering's effects posted last week at MarketWatch.com. The resulting hit to the economy as the Fed pumps less money into the financial system likely will mean a rise in interest rates, seen early on in mortgages and, eventually, loans for autos, education, and other big-ticket costs. "On the upside, however, U.S. travelers may get more bang for their buck when they travel overseas next year" as the dollar gains value against foreign currencies, the post says.

How do financial markets around the world view action by the U.S. Fed? In a Reuters video posted here at the Globe & Mail website, Jonathan Garner of Morgan Stanley in Hong Kong says in part that a strengthening dollar could be tough on developing economies - lowering returns on investments, for example, in some Southeast Asian countries.

The impact of Fed moves is global, as described in this analysis of the tapering posted at Voxeu.org, a site about economic policy. The post by World Bank economist Poonam Gupta and Berkeley professor Barry Eichengreen goes into detail on why economic turmoil stemming from Fed tapering is a real concern for some countries.

Forbes.com contributor Bill Conerly insists that Fed tapering will have little effect on the economy because, in his view, the Fed stimulus itself "has had little effect." In any event, he says, "the Fed is not hitting the brakes, just easing up a small amount on the gas pedal." Conerly notes that since the financial crisis, the Fed had launched "quantitative easing" programs three times. "In the interludes, the economy did not plummet. The size of these reserve credit increases is huge by historic standards. It's amazing that they did not send the economy into the stratosphere," he writes.

Simple explanations of Fed tapering and what it is supposed to accomplish are here at Thomas Kenny's post on About.com. He says the word tapering "exploded into the financial lexicon on May 22, when U.S. Federal Reserve Chairman Ben Bernanke stated in testimony before Congress the Fed may taper - or reduce - the size of the bond-buying program known as quantitative easing." Bernanke's words on the subject were that the Fed might "take a step down in our pace of [bond] purchases."

rkanaley@phillynews.com

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@ReidKan