It didn’t take long for the Federal Reserve to come under fire for its resumption of asset purchases, aka “QE2”, announced at the Federal Open Market Committee meeting on November 3. The decision had the unusual side effect of uniting Sarah Palin and World Bank president Robert Zoellick, the former calling on Fed chairman Ben Bernanke to “Cease and Desist” and the latter raising the possibility of including gold in a future global monetary arrangement. But the controversy truly caught fire on November 15, when the plucky Economics21 published an open letter to Bernanke, signed by economists, businessmen, and public intellectuals, in which the signatories declared that “We do not believe such a plan is necessary or advisable under current circumstances. The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed’s objective of promoting employment.”

The Keynesian party-line enforcement squad, led by Paul Krugman of the New York Times, responded with its usual mix of intellectual arrogance and ad hominem invective. The more mild-mannered Alan Blinder of Princeton, meanwhile, published an op-ed in the Wall Street Journal defending Bernanke, in which he conceded that “what the Fed proposes is neither foolproof nor perfect,” but “QE2 is better than doing nothing.”