I don’t think that we’re hysterically attacking QE2, so much as pointing out that it’s never been done before, that we don’t know whether it will work, and that, if it doesn’t work, we don’t know how it’s going to fail, either.
No, QE2 has been done before and it worked quite well. As I showed in this post and as noted by Paul Kasriel, the original QE started in in late 1933 and was very effective at spurring a robust economic recovery. And contrary to conventional wisdom, the key to making QE work then and now was not the lowering of long-term interest rates. It was about addressing the excess money demand problem and thereby spurring a recovery in nominal spending. Yes, interest rates may initially fall, but if QE2 works according to plan there should ultimately be an increase in yields. In short, QE2's success is not contingent on a sustained lowering of interest rates.