Great post (as usual). I think you go a little easy on Bernanke as perceived by Krugman. The case for a policy is almost never a slam dunk and people who are paralized unless they can dunk should never be passed the ball. Now as to Ben Bernanke as perceived by me, I am still thanking God, Harriet Myers and George Bush (ouch physical pain typing that) that Bernanke is Fed Chair. You know I think most academic macro (definitely including my own efforts) is crap. I do make (more than 2) exceptions for the work of Bernanke Gertler et al. The thought that George Bush (ouch) not only appointed a highly respected economist, but also one of the few with actually relevant actual insights boggles my mind ................
OK mind no longer in tilt. Uh where am I (Rome). Uh my point if any is that it is not only true that the risk of say 6% inflation due to QE 3-32 is tiny but also that no one has come up with a case tat 6% inflation implies significant social costs. Inflation is hated by the general public because they think it means higher prices and the same nominal wages so wage increases are hated by centrak bankers, in effect, because they act as if they think that higher nominal wages imply higher prices and the same nominal wages and employment. This is so insane that relying on a DSGE model is comparitively sane (OUCH why do I keep typing in a way which makes my head spin).
Oh well back to adding implausible but convenient assumptions to a DSGE model to make it generate amusing results (sometimes reality is so painful that I have to escape into a dream world).
This is a comment on intuition vs theory by Noah Smith at noahpinion.blogspot.com