4. The Fed still doesn’t have much appetite for financial volatility, and markets will readily embrace its reassurances that it will try to act to counteract these gyrations.

It didn’t take long for Fed officials to respond to last week’s volatility in an effort to calm the markets. The response came in the form of suggestions that, by maintaining its monthly securities-purchase program for a bit longer, the Fed could slow its retreat from a highly accommodating monetary policy. This was music to the ears of investors who are now conditioned to depend heavily on Fed support. By the end of the week, some were even suggesting that the Fed could embark on “QE4,” a new round of quantitative easing to artificially support asset prices.

Together, these four lessons suggest that, rather than being a one-off event, last week’s volatility is better seen as an indication of what may lie ahead -- unless nations can make profound and durable improvements in their economic and political fundamentals.

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