Looking back, everything seems clearer and sharply focused. Looking forward, it seldom has the same clarity. With central-bank policies for a about half a decade, it was pretty clear — just keep shoveling more money out there and drive debt prices to extreme levels. The consequences were clear in some places and murkier in others. Debt pushers would see their currencies devalue and a general rise in most financial assets — at least for a while — until the next country came along and did the same. Corporations, even countries, moved their risk curve out farther and farther as the debt-laden policies forced decisions that otherwise would have never occurred. Heck, "if the money is free, then why not use it" was the attitude. Of course, everything has a cost — eventually — and this funny money does too. With the latest Fed speak seemingly intent to really raise rates in December, the question is, "Can the world handle a rate hike?" So, let's step back a minute and try to consider the larger picture. The Federal Reserve is signaling, in the strongest terms yet, that they will raise rates for the first time in a decade (yes, a decade now) in December. They will likely raise by a mere quarter point if they do, but the effect around the world of just the notion that it is really time for "lift off" (as they keep calling it) is as clear as daylight. Bond yields across the yield curve and especially on the shorter end are moving higher, and bond prices are diving as a result. And all of this is the result of the idea that the Fed may raise rates a measly quarter point after almost 10 years of basically zero; after years of quantitative easing here and still plenty of quantitative easing abroad. So other than the obvious rate rise, what are other downstream effects? Certainly one is the obvious effect is a rising dollar. With dollar strength, the deflation quagmire probably deepens as anything priced in dollars gets more expensive, which means you will tend to buy less of them. The other bigger, and less transparent, effect is that all the countries, fund managers, etc., that have used a cheaper dollar to go on a debt-buying binge will suddenly see the price of their repayments increase. If servicing their debt gets more expensive, then that takes away from everything else they could have done with that money. A recent report from the Institute of International puts that debt at extraordinary levels when compared to 2008. The Institute puts those debt levels as having doubled from 2008 to 2014 and now totaling $6.8 trillion. That's bad enough, but where it's really bad is in emerging markets where non-financial corporate bonds have swelled to $2.6 trillion (up triple since 2008) and now is over 80% of GDP of those emerging markets. Like anything, it doesn't matter until it does, but clearly a rising dollar is not going to help the situation — especially in those places where a significant percentage of the debt is dollar denominated. So will a quarter point matter? Since almost all the trades are highly leveraged, it will definitely have an impact if it comes to pass for those playing money games. For those servicing debt for purchases made, it won't kill them, but the worry is what happens next. If the Fed raises rates does that mean that more rate increases will be coming? That's the piece that the market will have to price in, and that's an unknown. The Federal Reserve is doing everything in its power to make it clear it will not automatically turn to raising rates but will instead be data dependent, whatever that means. They are doing their best to tell us that taking away some of the medicine after 10 years is good for us because it tells us we are finally getting better. The risk is that the patient can't really stand on its legs yet and that probably happens if it thinks more rate hikes are coming so somehow the Federal Reserve has to persuade the skeptics on that point. So why does the Fed feel compelled to take the risk of shaking up the status quo? Clearly they want to normalize policy to fight the coming battles. It's a fact that the economy will not grow forever and unless rates actually rise, they simply can't be manipulated lower to spur growth in a weakening economy. So, in the end, we have all sorts of loose ends that will take years to work out. We have distortions all over the place. We have investments made that probably never should or would have had we not pushed rates to zero and the augmented it will a debt issuance binge. Essentially, we have created mountains of debt to solve our existing debt problems. That's some great logic. What a fine mess we have created. More from MarketWatch