• Fed can adjust quantitative easing in response to incoming data the same way it would adjust policy rates
• Disinflation trend has developed in 2010; deflationary equilibrium difficult to escape
• FOMC should try to avoid Japan’s experience
• Must defend price target from bottom as well as top
• Financial market effects of QE the same as conventional policy, including dollar decline
• Real effects of QE to be felt in 6-12 months
• QE has no impact on US fiscal outlook, which remains poor