In Defense of QE2

The German and Chinese governments, Republican congressmen, the liberal economist Joseph Stiglitz, and Sarah Palin don’t agree on much. But they’re united in their opposition to the Federal Reserve’s second round of quantitative easing—or, as it’s known, QE2. According to various of the Fed’s critics, QE2—which involves the Fed’s buying six hundred billion dollars in government bonds over the next eight months—could start a global currency war, weaken the dollar, spark inflation, and create price bubbles in asset classes around the world. Next thing you know, dogs and cats will be living together.