> It's a useful policy (assuming you believe in Keynesian stimulus) because the distributional effect is close to nil, unlike fiscal stimulus or mailing money to specified individuals.
Except that we don't really see QE causing the hyperinflation many feared or the lowering of real wages. If it is intended to do these things, it is a miserable failure.
The fact is that when you dump a whole lot of money into what Steve Keen called "the slowest part of the system" it isn't going to actually have much effect. Velocity in money matters if you want the money to actually circulate.
That's simply incorrect. According to Krugman (back in 4/2013, back when data was not yet released) 2013 will be a test of Market Monetarism (QE to target NGDP), since the QE3 will be offset by fiscal austerity:
...we are in effect getting a test of the market monetarist view right now, with the Fed having adopted more expansionary policies even as fiscal policy tightens.
Except that we don't really see QE causing the hyperinflation many feared or the lowering of real wages. If it is intended to do these things, it is a miserable failure.
The fact is that when you dump a whole lot of money into what Steve Keen called "the slowest part of the system" it isn't going to actually have much effect. Velocity in money matters if you want the money to actually circulate.