The failure of politicians to deal with America's economic problems has prompted the US Federal Reserve to adopt its most aggressive policy stance yet to spur recovery from recession. The Fed action will further exacerbate the hot money flow that has inflated asset values in Hong Kong and increases the risk of a property bubble bursting. As we report today, the Hong Kong Monetary Authority has tightened property lending guidelines to safeguard the stability of the banking system What sets the third round of quantitative easing - or QE3 - apart is that this one is open-ended. The Fed will inject an additional US$40 billion into the economy each month, through purchases of mortgage-backed securities, until the 8 per cent-plus jobless rate comes down significantly. Together with purchases of longer-dated Treasury bonds, this means the Fed will be buying assets at the rate of US$85 billion a month until the end of the year. It has also indicated that its target interest rate will remain "exceptionally low" - or virtually zero - until mid-2015. Already buoyed by the go-ahead for the US$650 billion euro-zone bailout fund, markets reacted positively. But the Fed's moves add to the dichotomy between the concerns of the US and other economies. While the Fed tries to revive asset values, particularly in the property market, short of creating bubbles and unduly fuelling inflation, policymakers in Hong Kong and mainland China have been trying to rein them in. The prospect of a renewed flood of hot money set alarm bells ringing in Hong Kong. Norman Chan Tak-lam, HKMA chief executive, says QE3 and the euro-zone bailout risk overheating in our asset markets, where property prices have already surpassed their 1997 peak. Effectively, Fed chief Ben Bernanke has made an open-ended commitment to printing money. This may be good news for the markets and President Barack Obama's re-election chances. Bernanke's denial that it is politically motivated does not convince Republicans, who would like to clip the Fed's wings, though their political intransigence on fiscal policy has not helped. But it portends unequivocally bad news for Hong Kong and other places, where hot money could further inflate asset values and create property bubbles. It is good that Chan lost no time in introducing countermeasures. The Hong Kong and mainland governments should both be thinking about doing more to rein in property prices.