The financial markets appear to be in something of an uproar. The plan was to outline what?s going on, and then explain why it matters to the individual, in a linear and carefully-thought out manner. What we have instead is a ramble through the financial world, a forecast of hard times, and some tips on how to ride it out. Tip number one would be: Live in Bermuda, which is sheltered from the worst that others must endure.

The US economy leads the developed world. It sets the pace that all the others follow. It dictates to the Bermuda economy directly, via the ability of US tourists to visit, and indirectly, through the agencies of size and proximity.

For some years, the US economy has performed well, driven by natural and human forces. Among the former are the economic cycle (the seven- and ten-year waves, plus others shorter and longer, on which the global economy and individual economies run), and events such as Hurricane Katrina. Human forces at work on national economies include national governments and the behaviour of competitors.

It was Herodotus who said: ?Circumstances rule men; men do not rule circumstances.? One of the strongest actions taken by men in the US economy in the past few years has been the raising of interest rates from 40-year lows of close to zero, to today?s 4.75 percent. Former Federal Reserve chairman Alan Greenspan had cut rates over and over, until there was not much left to cut, in the hope that it would persuade people to spend.

Consumer spending is one of the great drivers of economic growth, which is a little like saying that money makes the world go around. We buy products and services. The companies that provide them make a profit. They reinvest in new products, which we buy, and so on, until we lose our jobs, or think we may lose them. Then we stop spending, or at least spend less, slowing down the global march of economic progress.

Having staved off the slow-down by dropping rates to zero, Greenspan oversaw a fairly rapid reinstatement of rates considered ?normal?, or at least a rate at which some feel that modern economy can function on all cylinders. Greenspan retired less than a year ago. His successor has inherited an economy nearing the end of its up cycle, and ready to catch a breath, cool off, or any one of a dozen other widely-used metaphors for slowing down.

I didn?t think much of Greenspan?s interest rate approach. What goes up must come down, and dropping the headline interest rate merely robbed savers. If you owed money on a credit card, the borrowing rate didn?t fall. Commercial borrowers may have paid a few percent less for a while, but their interest payments are a small item in the profit and loss department. The bank rate is rarely the deciding factor in a company?s formation, existence or failure.

Fear that interest rates are about to be driven higher in the US has arisen in the past couple of weeks, doing horrible damage to stock markets. Horrible damage happens often enough in stock markets that the past two weeks need not cause undue alarm. But everything surprises financial markets, even those events and trends that anyone in his right mind could see coming. What has caught them unaware this time is the possibility of a period of inflation.

Ever since the early 1980s, when interest rates reached 18 percent, US economic strategy has matched that of the Europeans since the end of the Second World War, which is to do anything necessary to avoid excessive inflation. Money needs to hold its value for the whole shooting match to operate, as proven by Hitler?s Germany, Argentina not so long ago, or Zimbabwe today. Any increase in the rate at which money loses value through price increases results in everyone getting the jitters.

Rather than wait until inflation actually appears and starts to do any damage, those who invest the big money, i.e. the capital markets and speculators, assume the worst is coming, and is unavoidable. They cash in any unrealised profits they may have in stocks, and start laying people off. It?s the American way.

The coming end of a long upward cycle in the US and global economies has been attended by various bubbles, pockets of the market where price inflation has been carried away on a wave of emotion The US housing market is a good example.

Gold has simultaneously broken out of a 25-year coma and raced to highs not seen since the 1980s. A reader has been clueing me in on the gold market, but the more I read, the less I understand. My simple senses tell me that gold had under-performed for all manner of reasons for an inordinately long time, and its return to a traditional role as a safe haven makes eminent sense. Estimates that it is on its way to $3,000 an ounce make less sense, however.

I suspect we are heading for a recession, and would have no problem with getting it over with as quickly as possible, even if that means it has to bite a little harder than anyone would like.

What does all this mean to the individual? I?d need 100 pages to cover that, but here?s a short summary: in the grand scheme of things, not that much. You should already be looking after your finances and taking sensible steps, such as paying off debt and saving as hard as you can. If you are a saver, a period of increased rewards may be in the offing, but make sure you out-earn, or at least match, inflation. Bermuda?s annual inflation rate is officially 2.8 percent, but it already feels higher.

If you?re at the stage of having an investment portfolio, it always makes sense to have some of it in inflation-linked investments, such as suitable US Treasuries or index-linked UK National Savings.

The income they pay increases if inflation exceeds certain trigger points. In the US, such bonds are relatively expensive at present, but they pay a reasonable rate of return even when the inflation rate is low.

If you?re already rich, I have no advice other than: have a ball. You?ve earned it.

The workings of the global economy are fascinating, and never more so than when your job is threatened. Only then, it seems, do people pay attention to the larger picture, by which time it is too late to take a nuanced view.

Of course, if you lose your job, nuance goes out of the window, along with everything else.