Fed's dilemma: Mature economies slowing, emerging markets strong

Data from the U.S. and Japan suggest economic activity is slowing for the more mature economies around the globe. U.S. retailers are coming in light on revenue -- and remember that close to 70% of U.S. GDP is consumer driven. However, emerging-market economies appear to be growing nicely, with China being of particular note, growing GDP 11.1% in the most recent quarter, above its 9% target rate.

China officials have been attempting to get growth back to its 9% GDP target for quite some time, so far without much success. And the economies of other commodity-focused counties continue to do well.

Is the Fed responsible for the world's economy or just that of the U.S.? This is a very difficult question to answer. However, the last time world leaders let broad-based inflation pick up, in the late sixties and early seventies, it culminated in the breakdown of the Bretton Woods agreement and the global economy went through decades of hell. Emerging markets were the most severely punished.

This is a serious issue the central bankers of the larger and more mature economies need to address. Is it worthwhile for the mature economies to approach a recession while emerging markets attempt to slowdown their economies? We will see. They must be discussing that issue right now.