Far be it from me to argue with someone who received a Nobel Prize in economics, but I still have questions about this quantitative easing. Money earned from labor--cleaning the floor at McDonald's, for example--seems so much more difficult to get than money gained from quantitative easing. Workers sell their sweat and discomfort for practically nothing while banks can get unlimited amounts of money for their own purposes. Something seems wrong here. How about "quantitative easing" in the form of generous checks from the IRS, more for the poor and less for the rich? Wouldn't that create more jobs than the bank welfare program we have been conducting?

It would drosera, but that wouldn't be the point of all this would it?

ignore the drosera comment; i realize it's someone's name (carnivorous plant!--yikes!)

Krugman's point seems to be lost to some here. He strongly advocated for direct stimulus through jobs programs. He called Obama's stimulus program very weak. There is a fairly long time lag before you see the benefits.

What he is commenting on here is the Fed's current "supply side" solution. He is saying that the plan is way too little to do any good. He does not comment on what would work. I get the sense that he is not fond of a supply side solution.

Still talking 'liquidity'? Seems to me it's more clearly an issue of solvency in the financial sector, which is why they've been mopping up every dollar they can get to get their balance sheets into shape without loaning any out into the economy.

Actually, a little inflation would be a god-send to the economy. Forget the mild erosion of your savings. Think about the rise in your wages relative to your debts. Across the whole of society, inflation makes paying off debts easier and will get us out of the slump faster because the slump is caused by too much private debt. If you pay 6% interest and there is 6% inflation in your wages then you pay effectively no interest. That's why banks and other creditors hate inflation so much.

barryT: There's no way that people's incomes would increase relative to your debts. For your assumption to work, the rise in wages would have to be higher relative to all the non discretionary spending in order for the end result to have a positive effect on a person's debts. Not gonna happen. I'd say the last 30 years of stagnant wages is proof enough of that. Inflation in this current climate would only erode the average person's already weak buying power thanks to stagnant wages which, BTW is the elephant in the room that no economist quack has the nerve to address.

Anon 22:57: Paybacks are a bitch for whom? It wasn't the little guy that had slaves nor was it the little guy who screwed the Native Americans out of their country. No sir. It was the same interests who are screwing Americans (and many others in the world) today. Unfortunately, the ones deserving payback the most are the last to get it and usually not until the country they've looted has completely crumbled and even then, the little guy gets the worst of it.

The tide seems to be rising, as is the caliber of the participants here. It's nice to hear so many, obviously well informed folks, that are not "swallowing the party line" points of our Nobel Prize winning shill, Master Krugman. Share your clear perspectives far and wide. Kudos

"We are living in interesting times.

Greed is good, or so says Wall Street and the Corporatocracy. So they looted my retirement account and knocked the bottom out the real estate market with questionable lending practices making my home a bad investment. Then they laid off a bunch of us old farts because our health insurance cost too much and it cut into their obscene profits. Yes, we are living in very interesting times.

I think some very dispossessed Indians wished this upon us when we took their land over a hundred years ago. Or perhaps it was the slaves who were beaten or killed when they refused to work without pay and wanted to be free. Those two actions made America what it is today.

Paybacks are a bitch."

Best comment I've seen in a long time. I'll be sending this one as viral as I can.

Krugman misses the point entirely, as does every other economist and politician. The sole goal of the government should be to ensure, if not directly provide, full employment and a rising standard of living for every citizen. I don't see how handing another penny, let alone $600b to Wall St. for more of the same failed "trickle down" b.s. is going to help or change anything. People should be rioting in the streets for another WPA. Why they aren't is a tribute to the corporate propaganda wing that is the "liberal" media of today.

Apparently, many of those commenting upon Prof. Krugman's evaluation of Bernanke's performance understand that if they ruled the world, they would handle things differently. Insightful attitudes all, yet Krugman plainly explained that Bernanke was not even ruler of the Fed, let alone the world, but simply its chairman.

This is, after all, America, and we have just handed control of the House of Representatives over to a crowd that expresses great sympathy to the concept of mob rule. If any of us were Bernanke (and commission), the best we could do would be to buy hundreds of billions of dollars worth of T-bills, because that is all we have power to do. As Krugman indicates, the Fed has already yanked the short-term interest rate to near-zero, so this remainder of tools available to the Fed to try to bolster some recovery are all they have. Anything beyond this monetary move by the Fed would require legislation. Anybody here expecting brilliant fiscal innovations from Speaker Boehner during the incoming Congress?

Krugman has already called for stronger government interventions into the American economy. When a string of keyboard warriors, trailing in tow, demand the same, yet denounce the Prof. for not doing likewise with his last taken breath, I gather that being an economist/pundit means not being listened to.