Lee, a doctor of economics whose CV is dotted with senior appointments to the International Monetary Fund and US Federal Reserve, had one clear message for the packed conference room: don't hold your breath waiting for US interest rates to rise.

If this sounds a little remote from the quotidian preoccupations of suburban Australia, think again: if the crazy gyrations that characterised global financial markets this week were to become commonplace, your superannuation, your savings, your bank's ability to finance your business, your real spending power and your government's capacity to fund its fiscal and current account deficits could be under constant siege – and all thanks to monetary policy in the US.

Despite its relative economic stability, Australia finds itself buffeted by the winds of a global financial storm whipped up by dangerous imbalances. Those imbalances have got investors on edge. Fear is again on the rise.

"Up until fairly recently, we had been lamenting a lack of volatility. Careful what you wish for, because not only is Volatility back but its less attractive twin Fear joined the party last night," is how Suncorp's head of treasury research Darryl Conroy summed it up in a pithy Thursday morning note.

Similar views are being expressed around the world.

"The market is not trading off of fundamental news, it is trading off worries, whether it's the importing of weak economic growth or Ebola," Mark Luschini, chief investment strategist at Janney Montgomery Scott, told CNBC after yet another lurching session of trade on Wall Street that saw it post its sixth losing day in a row for the first time this year.

One way of measuring this is the CBOE Volatility Index. It is also known as the Fear Index. It has run at levels not seen in several years.

"Volatility has reared its ugly head again, but we had nothing for the better part of 16 to 18 months. When you have nothing and go to something, it seems magnified, it's much more pronounced," said Chip Cobb, portfolio manager at BMT Asset Management.

"We do all have short-term memories and really have never gotten away from 2008 and 2009. Even though the market was up double digits last year and started off well this year, there hasn't been a time in the last six years where people have had really strong convictions about this bull market," Cobb said.

The imbalances see the US, the world's biggest economy, on one side. It was the biggest to fall when a cataclysmic build-up of risks based on overpriced housing led to the greatest financial collapse and recession since the 1930s depression. It is showing some signs of recovery.

On the other side is Europe, Japan and China, the first two still battling to regenerate economic growth and stave off catastrophic deflation six years after the great collapse and the third trying to manage an orderly slowdown in economic growth.

It is China's cooling and global supply gluts which are responsible for recent price declines in two commodities – iron ore and coal – which account for about a third of Australia's export revenues.

At the same time, the US's painful, gradual recovery from the global financial crisis has recently gained momentum, allowing the Federal Reserve to first taper off and now to end six years of so-called "quantitative easing", a radical money-printing adjunct to conventional monetary policy designed to push oceans of cheap credit into productive areas of the economy.

As this process cycle ends, the Fed will start looking at tightening money supply when inflation and more "normal" growth rates (of 3 per cent or more) set in.

As the recovery consolidates the value of the US dollar rises. Global capital flows begin heading back into US dollar assets – bonds, shares, properties, bank deposits – and away from where returns are either lower or riskier elsewhere in the world.

Australia has had a taste of this global realignment in recent weeks, watching as the dollar has dropped by about 6 per cent against a strengthening US dollar.

Heightened perceptions of currency risks have also driven global investors out of Australian stocks. Even the supercharged real estate markets of Sydney and Melbourne appear to be cooling.

But it is all fragile. This past week's wave of global volatility partly reflects mixed messages from US economic data and assertions from Fed board members that the first interest rate rise is unlikely to come until well into the second half.

The jitters were neatly exemplified on Wednesday night, Australian time. Massive amounts of money were ploughed into the security of highly favoured 10-year US government bonds.

That drove yields below 2 per cent for the first time since the Fed talked about removing its monetary stimulus in May last year.

US shares, meanwhile, sold off on investor fears, plunging 4 per cent before recovering to end the day down about 1 per cent.

And the trigger for all of this market madness?

Disappointing US retail figures set the bears free, but broader concerns about the state of the world quickly took over. Ultimately, the so-called "flash crash" in bond yields might be attributed to a massive electronic buy order from a panicky, or fat-fingered, trader.

The spectre of a third eurozone recession, and even deflation, in six years also has markets spooked at the moment, as do weaker-than-expected inflation figures from China and Japan.

Although nobody likes high inflation, slowing price growth often reflects labour market slack, patchy consumer spending and sluggish business investment.

A descent into deflation – a real possibility in Europe – can be catastrophic as consumers and investors hold their cash in the hope of further price falls until economic activity all but ceases. The relative cost of paying off debt, meanwhile, climbs.

The Greeks provide a tidy snapshot of this sharpening global dichotomy. That nation's debt has become a synonym for Europe's ills.

Greek 10-year bond yields have risen to above 8 per cent on jitters about political stability and the country's ability to repay funds disbursed under EU and IMF bailouts. Remember that happened at the same time as investors drove the US yield below 2 per cent.

Europe's eventual recovery, like that of the US, may depend on an asset-buying program similar to the Fed's by the European Central Bank.

ECB president Mario Draghi famously promised in 2012 to do "whatever it takes" to save the eurozone and is considering ramping up existing quantitative easing programs.

However, unless this new money trickles quickly down to consumers and small businesses, as it appears to have done in the US, restarting growth in Europe could take years.

"We are getting to the idea that we could perhaps see a sovereign crisis in Europe," Forex.com research analyst Chris Tedder said.

The slow pace of the European recovery was weighing on the mind of IMF managing director Christine Lagarde last weekend when she downgraded global growth forecasts for the third time this year.

Top Federal Reserve officials, in turn, have started worrying about how this sagging growth and market volatility have boosted the greenback, and so the country's export competitiveness. A strong currency also suppresses inflationary pressures, meaning the Fed can hold back further on tightening its monetary policy.

"If foreign growth is weaker than anticipated, the consequences for the US economy could lead the Fed to [begin increasing rates] more slowly than otherwise," Fed vice- chairman Stanley Fischer said on the sidelines of the IMF's annual meeting in Washington last weekend.

Citi's Lee told Business Day the Fed's concerns reflect the growing importance of exports, not only to commodity-based economies such as Australia and low-cost manufacturers such as China, but also to the previously self-contained US.

"It's very unusual for the Fed's Open Market Committee to talk about the impact the rest of the world is having on domestic conditions," he said.

"When exports made up less than 15 per cent of gross domestic product, it wasn't important.

"But globalisation really has transformed the US economy – it's now 30 per cent."

With no doubt that global goods and financial markets are tightly linked after decades of technology-driven globalisation, economists are wondering if the US recovery is sufficiently muscular to do the rest of the world's heavy lifting.

"The big question is, 'are these global imbalances between the major drivers of global growth going to drag down the US economy and create a more systemic issue for global growth?'," asks Tedder.

"We see that it definitely could. The market is incredibly nervous and that nervousness is not going to go away given the persistent threat of diminishing global growth."

"The global economy and the markets have a history of traumatic economic events," says Paul Mortimer-Lee, chief economist for North America at BNP Paribas in New York. "Psychologically and physically they have not recovered fully and are anxious about a relapse."

Australia, which was spared the worst of the global financial crisis thanks to demand from China for its natural resources, is unlikely to escape some contagion.

National Australia Bank this week joined a growing band of commentators warning of further slowing of the domestic economy, with current indicators pointing to weak third-quarter growth in gross domestic product.

According to NAB chief economist Alan Oster, business and consumer confidence remain patchy and the terms of trade – the relative value of exports against imports – are being undermined by weak commodity prices and the falling dollar, which makes imports more expensive.

However, the currency's recent depreciation should also help exporters and trade-exposed industries and so aid the economy's transition away from dependence on mining infrastructure and mineral exports.

NAB's downgrade is modest, from 2.9 per cent to 2.8 per cent for the current financial year. Doomsayers such as noted US economists Nouriel Roubini, also see a slowdown this year and an even bigger decline, to below 2 per cent, for the 2015 calendar year, because of declining demand from China.

Citi's head of macro strategy, Jeremy Hale, is not so gloomy, but points out that aside from softening demand for commodities, China is at risk of some sort of financial crisis because of a rapid build-up of private sector debt. A hard landing for China would be bad news for the Australian economy.

"I think if the Australian economy survived the GFC without recession, it's probably almost bulletproof in that regard," he said.

"But the biggest risk I see is that the way Australia survived that, in a sense, was that it was very levered to a very strong Chinese economy.

"A lot of people believe that China has a lot of levers to pull, and because it isn't a democratic society it can short-circuit some things that would trip up countries that are – but I would still see a financial crisis as the biggest threat."