It's well known that Federal Reserve policy can reach far beyond U.S. borders in a global economy where capital has no boundaries. Lower U.S. rates, for example, can drive capital to higher-yielding foreign markets, and vice versa.

When Chairman Ben Bernanke hinted that the Fed plans to start trimming monthly purchases of Treasury securities and mortgage-backed bonds beginning later this year, global markets fell sharply across the board.

Related: Fed Will Taper This Year, But Not for Obvious Reasons: Bill Gross

“If the Fed does what they say they're going to do—which I don't think they will—but if they do… and they reduce asset purchases and U.S. interest rates go up, the capital outflows are going to come from the emerging markets back to the U.S., the carry trades are going to be unwound and that’s going to leave these economies high and dry,” says Jim Rickards, senior managing director of Tangent Capital.

And ultimately, those emerging markets “will have unsustainable projects and bank debt, and it could be the beginning of another emerging market crisis which as we know in 1997-1998 spread to major economies."

Which is why Rickards says the Fed, along with China’s central bank, will retreat from any tightening policies. Those policies are already hurting emerging markets, he says.

Related: Emerging Markets are Making a Comeback in 2013: BlackRock's Koesterich

“I can draw a straight line from the currency wars to the riots in Brazil," says Rickards, author of "Currency Wars: The Making of the Next Global Crisis." He explains: “Two years ago the Brazilian currency was very strong because the Fed was trying to cheapen the dollar. So Brazilian exporters went crying to the central bank saying ‘you’ve got to weaken the currency' so… the central bank went through a whole series of rate cuts which they should never have done.”

Brazil’s currency was devalued but exports did not improve and inflation rose instead, says Rickards. Then local authorities raised bus fares, and people rioted. The fare increases have been reversed in Brazil's two biggest cities but some protests continue because inflation is only part of the problem.

Brazilians were also rioting because of the billions of dollars spent on the 2014 World Cup and 2016 summer Olympics in a country where 21% live in poverty and income inequality is among the highest in the world. (The U.S. poverty rate is 15% but income inequality is far less than Brazil’s, according to the World Bank and OECD.)

Rickards says other countries vulnerable to exporting inflation from the Fed include Thailand, Indonesia, S. Korea, Taiwan, India and South Africa—which are largely export-driven economies.