But speculative bubbles are not so easily ended indeed, they may deflate somewhat, as the story changes, and then reflate.

Until last year, policymakers could always produce a new rabbit from their hat to reflate asset prices and trigger economic recovery.

Under the gold standard, it still would have been possible for central banks to reflate their depressed economies had they moved together.

By contrast, were the ECB to adopt decisive measures, it could reflate the entire eurozone and obviate the need for countries to act unilaterally.

But, t o reflate the economy, he told us, the Fed doesn t have to restore business investment any kind of increase in demand will do.

Then growth slumped to below 1 in the first half of 2011. QE3 will be much smaller, and will do much less to reflate asset prices and restore growth.

By contrast, were the ECB to adopt decisive measures, it could reflate the entire eurozone and obviate the need for countries to act unilaterally. But, while the ECB has the capacity, the question remains whether it is has the will.

One problem with the word bubble is that it creates a mental picture of an expanding soap bubble, which is destined to pop suddenly and irrevocably. But speculative bubbles are not so easily ended indeed, they may deflate somewhat, as the story changes, and then reflate.