"Specifically, governments may be tempted, especially around election time, to use self-insurance as a substitute for adjustment, rather than to help cushion the impact of a shock or support economic rebalancing."



-Here we at the core of the problem. Not only the self-insurance but indeed, precisely, the perverse effects of this loose monetary policy on these emerging economies in the first place. The inflows of capital allow these economies to slow (or perhaps never even start) needed reforms with a long-term view, in favor of short-sighted political goals. Then, of course, when the hot money flees the politicians can point the finger at the Fed instead of taking on their share of accountability as well.