The QE2 Critics

Alan Blinder has a column in today’s Wall Street Journal inadvisedly called “In Defense of Ben Bernanke.”

That’s a poor title since Mr. Blinder isn’t really defending Bernanke but rather pointing out the holes in the arguments of QE2 critics. Many of the aspects claimed about QE — that it devalues the dollar or promotes inflation — are true about traditional Fed tools like lowering short-term rates.

The Fed has a dual mandate: low inflation and high employment. The only tool it has right now is QE. As I see it, the soundest argument against QE is that it isn’t needed since the economy is recovering.

Here’s an open letter to Bernanke arguing against QE2.

Posted by on November 15th, 2010 at 2:04 pm


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