The fact that the World Economic Forum was held in Istanbul this year is no great coincidence considering that the new dynamics of the global economy will emerge from this region of the world and Istanbul will be at its center. Despite European Central Bank (ECB) President Mario Draghi's monetary expansion, the risk of secession from the EU is climbing every passing day. While developing Asia is seeing growth falls as a result of China's economic transition, the U.S. Federal Reserve is in a quandary as to how they should react. The Fed is likely to hike interest rates by mid-2015 but this will neither completely remove the aftermath of the 2008 crisis in the U.S. nor will it have a positive impact on the global economy. An early interest rate hike will geometrically boost the U.S.'s foreign trade deficit by driving up the dollar even faster, which is already on the rise due to hot conflicts in the Middle East. This situation will lead the U.S. to revert back to the vicious cycle that it experienced in the early 1990s - a high dollar, high interest rates, high military spending and financialization (when financial leverage expands outstripping financial capital, or equity, leading to a massive expansion in tradable financial instruments).This vicious cycle, without any doubt, will push the U.S. and the world economy into a much deeper crisis than that of the 1990s, as has recently been indicated by reports. According to the Geneva Report published by the International Center for Monetary and Banking Studies, falling growth rates and debt, which reached record levels in developed countries, may lead to a new and much deeper crisis. The report suggests that interest rates should remain low across the globe for a very long time in order for households, companies and governments to be able to service their debt. The report discloses that the debt burden of the financial sector in developed economies has fallen especially in the U.S. and the ratio of household debt to income has not risen.The report also calls attention to the rapid increase in public sector debt in rich countries and private sector debt in developing economies. The ratio of the total debt burden of both public and private sectors in the world to national income was 160 percent in 2001, climbing to 200 and 215 percent in 2009 and 2013 respectively. The report warns against the impact of the toxic combination of escalating global debt and decelerating nominal gross domestic product. The report also stressed that this toxic combination is often triggered by the slowdown in real growth and falling inflation. The report cited some obvious solutions to these problems. Starting from the U.S., national debt and the debt burden of households should be minimized. However, it seems that the Obama administration will do the exact opposite of this in the last two years of his tenure. It seems as though he will increase military operations and hence the public debt burden, which will start another strong dollar period by pushing up interest rates. This is reminiscent of the period which started with the Plaza Accord during the Reagan administration of 1985. For those who don't remember the Plaza Accord of 1985, the U.S. discovered the productivity of its industry and enhanced its exports by keeping the U.S. dollar down in comparison with the Deutsche mark and Japanese yen; however, in doing so it sidelined Germany and Japan. Only in 1990 did Germany start to handle the situation by reunifying with East Germany. After the Plaza Accord the U.S.'s earnings surged upward along with raw material and energy prices. Additionally, interest rates started to decline due to the impact of financialization. Until 1985 Reagan enjoyed this luxury and he never did what Obama strives to do today. The financialization and run-up of representative money led to small-scale crises in the world apart from the U.S., Europe and Japan. The crises in Mexico, South Korea, Russia and Turkey foreshadowed the current crisis. At every step that he took, including the Plaza Accord in 1985, Raegan paved the way for the Bush administration's politics. While the Fed was assessing the dollar after the Reverse Plaza Accord in 1995, it allowed the U.S. to have a deficit, but in return for this, it was saving Japan and Germany. So, what seems to have aroused Germany's propensity toward Nazism today is this historic mistake of the Fed, which brought Bush to power.While the U.S. has tried to close its deficits by relying on a strong dollar and high interest rates, it took no account of the fact that it would not be able to control its dollar supply which drove the savings glut of China and inspired the issuance of toxic assets by mortgage companies in 2008. Alan Greenspan, one of the former Fed chairs, was pointing to this while he was constantly verbalizing the mortgage crisis toward the end of his tenure. He meant that the system would collapse and devour everyone. His suggestions came true; it was a vicious cycle that entrapped everyone.Now, I wonder whether Obama and the incumbent Fed chair Janet Yellen are repeating the mistake made by Clinton and Paul Volcker in 1995. Now, the U.S. war crafts that sweep through the Middle East are supporting the Fed which is rapidly heading toward a high dollar and high interest rates. This, beyond any doubt, means a new Republican power for the U.S. and a deep crisis that will prevail in the near future.