The story behind QE2 echoes the story behind the stimulus -- and much else that we’ve tried since the financial collapse. In 2007 and 2008, a truly extraordinary event reshaped our economy. But our political system remained much the same. So though various government entities attempted to mount an extraordinary response, our policies, particularly as we got further and further from the collapse of Lehman and more and more used to high unemployment, became quite underpowered when compared to the events they were meant to address. And then, having not done enough to make a major dent in the problem, they become discredited because they’ve failed to make a major dent in the problem, which in turn made it even harder to amp them up to a point where they’d be effective. Doing too little to start, we’ve learned, makes it harder, not easier, to do more later on.
