Bernanke borrows from bloggers for QE3

The US Federal Reserve’s shift to open-ended asset purchases last week caused quite a stir, not least because it seemed to be admitting the failure of its response to the crisis so far.

Faced with stubbornly high unemployment, low inflation and rates close to rock bottom, the US has very nearly become Japan. To stop the rot, Ben Bernanke’s new plan is to inject money and keep injecting it until economic growth returns and unemployment eases, in an acknowledgement that previous rounds of monetary easing, including Operation Twist and the zero interest-rate policy, have been insufficient to restore demand.

To some, this new strategy is just a...