Rather than boosting credit to the real economy, unconventional monetary policies have mostly lifted the wealth of the very rich the main beneficiaries of asset reflation. But now reflation may be creating asset price bubbles, and the hope that macro prudential policies will prevent them from bursting is so far just that a leap of faith.

At first glance, Kicillof seems to be correct this looks like textbook Keynesian reflation. But Keynes would not have approved of the macroeconomic policies pursued by Fernández and her predecessor and husband, the late Néstor Kirchner.

In both 2010 and 2011, leading economic indicators showed that the first half slowdown had bottomed out, and that growth was already accelerating before the announcement of monetary easing. Thus, QE nudged along an economy that was already recovering, which prolonged asset reflation.

In the 1930 s, after the gold standard broke down, world leaders could not agree on coordinated reflation of the global economy. In his book Golden Fetters, the economist Barry Eichengreen argued that the lack of coordinated action dragged out the global recovery process.

The classic case is Britain s short lived return to gold in the interwar period. The attempt to reconstitute the pre World War I model of globalization collapsed in 1931, when domestic politics forced the British government to choose domestic reflation over the gold standard.

An economic shift also needs to be carried out by Europe and Japan a shift from deflation to reflation. Strong demand growth in Japan and Europe that produces a higher level of American exports would be the most powerful pro trade liberalization force imaginable.

Moreover, the stock market channel leading to asset reflation following QE works only in the short run if growth fails to recover. And the reduction in real interest rates via a rise in expected inflation when open ended QE is implemented risks eventually stoking inflation expectations.

The Germans, for example, regretted having agreed to joint fiscal expansion at the Bonn summit, because reflation turned out to be the wrong objective in the inflation plagued late 1970s. Similarly, the Japanese came to regret the appreciated yen after the Plaza Accord succeeded in bringing down an overvalued dollar.

In short, QE3 reduces the tail risk of an outright economic contraction, but is unlikely to lead to a sustained recovery in an economy that is still enduring a painful deleveraging process. In the short run, QE3 will lead investors to take on risk, and will stimulate modest asset reflation.

First, Kicillof attributed Argentina s rapid economic growth in the years between its 2001 debt default and the 2008 global financial crisis to a Keynesian reflation of domestic aggregate demand. Keynes made a tremendous intellectual contribution in showing that supply in a market economy does not necessarily create its own demand, and that demand shortfalls can cause avoidable recessions.

The risk of a global crash has been low, because deleveraging has proceeded apace in most advanced economies the effects of fiscal drag are smaller monetary policies remain accommodative and asset reflation has had positive wealth effects. Moreover, many emerging market countries are still growing robustly, maintain sound macroeconomic policies, and are starting to implement growth enhancing structural reforms.

Third, the Fed may actually exit zero rates too late and too slowly (its current plan would normalize rates to 4 only by 2018), thus causing another asset price boom and an eventual bust. Indeed, unconventional monetary policies in the US and other advanced economies have already led to massive asset price reflation, which in due course could cause bubbles in real estate, credit, and equity markets.

That also means that Germany and the ECB have less power than they seem to believe. Unless they abandon asymmetric adjustment (recessionary deflation), which concentrates all of the pain in the periphery, in favor of a more symmetrical approach (austerity and structural reforms on the periphery, combined with eurozone wide reflation), the monetary union's slow developing train wreck will accelerate as peripheral countries default and exit.