Alex Tabarrok and other econ bloggers (Economists for Firing Larry Summers were not invited) spent the afternoon at the Treasury, firing questions at Timothy Geithner.
Tabarrok describes Geithner's view of the Fed: "There was a recognition that the Fed could do “dramatic” things but a sense that the theory here was uncertain and untested."
I wouldn't really describe a cut in the discount rate, a 25 basis point cut in the Federal Funds rate, an elimination of interest paid on excess reserves, or another $400 billion in QE to be "dramatic", "untested", or "uncertain". On the other hand, doing nothing to hit your inflation target in the wake of a financial crisis has been tested by Japan for 17 years running and repeatedly been shown not to work.
(This was Man U.'s Tim Howard chant for those that didn't get the reference...)
In Defense of the Conventional Wisdom
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