If you read opinions like the one by James Bullard (current president of the Federal Reserve of St. Louis), you might think that Quantitative Easing has been a succes and it has shown how monetary policy can be effective even when the interest rate is near zero.
Fortunately, not everybody thinks so. Probably, the biggest problem that Quantitative Easing brings in is that it impedes the potential restructuring of the economic and financial actors as well as of the economies as a whole. John Doukas underscores very well the link between easy monetary policy and boom and busts episodes in financial markets (although I don’t agree with all his remarks, like quantitative easing leading to higher unemployment because of the relative price of labor to capital). To make things worse, ultimately Quantitative Easing does not deal with the essential issue of reviving the economic growth and reducing the unemployment in Western economies.
The proponents of the Quantitative Easing point to the fact that for now, the inflation rate is still very low (which justified the continuation of the Quantitative Easing up to now). However, the recent comment by Martin Feldstein, Why is Inflation So Low?, offers a potential explanation to the current low inflation in US. According to him, the link between the purchases of bonds by FED and the growth of the money stock has been weakened after 2008 because the FED started to pay interest on excess reserves which further created incentives for the commercial banks to pile up excessive reserves instead, and thus prevented the flow of new money into the economy.
When we take into considerations such a plausible explanation for the low inflation, and we also look at the weak economic growth in Western economies, the case for Quantitative Easing starts to appear much thinner, if not a complete failure.