Keynes arouses Fed as ECB looks for monetary exit

The worst crisis in modern financial history is set to culminate in an ideological clash, pitting the Federal Reserve against the European Central Bank in a debate that will shape the global economy for at least the next decade.

The catchphrase that will dominate central bank meetings for the rest of the year is "exit strategies"; now that the markets are showing some semblance of normality, how quickly should they be unhooked from the life-support systems that have transfused the banking system with government funds?

Act too quickly in raising official interest rates and reversing the flow of liquidity, and economies might slump back into recession, bringing Federal Reserve Chairman Ben Bernanke's well-documented nightmare about deflation to life. Wait too long, though, and the seeds of the next crisis may be sown as policy remains lax and encourages yet more financial bubbles that will inevitably burst.