Fiscal stimulus vs. quantitative easing

I've been puzzled by many things surrounding the rancorous macroeconomic debate.  One has been the relatively subdued debate on the optimal balance between fiscal stimulus and unconventional monetary policy (aka, quantitative easing).  Long ago I expected a modern revival of Keynes vs. Friedman monetarist debate.  There was some discussion but it has seemed subdued relative to what I would have expected.  My impression was that this didn't happen because it seems most conservatives don't like either fiscal policy or aggressive monetary policy (yet another puzzle).  I also thought that, maybe, the liberal-moderate wing of economists preferred fiscal stimulus because they thought the size of government was probably a little too small anyway.

But now I think the truth is we know little about quantitative easing and this makes economists of all stripes nervous.  And what little is known isn't especially encouraging.  In any case, I like the fact that Krugman has responded to those asking for more discussion on the subject:

Does unconventional monetary policy solve the zero bound problem?

Some comments on my post on the true cost of fiscal stimulus argue that the zero lower bound aka liquidity trap isn’t really binding, because the Fed is using other measures to expand the economy. A few commenters imply that I haven’t been paying attention.

Well, yes I’m aware that BB is doing a bunch of unconventional stuff. But the available — albeit thin — evidence is that it takes a huge expansion of the Fed’s balance sheet to accomplish as much as would be achieved by a quite modest cut in the Fed funds rate. And the Fed isn’t willing to expand its balance sheet to the $10 trillion or so it would take to be as expansionary as it “should” be given, say, a Taylor rule.

Which means that the zero bound is still binding, which means that right now we’re very much still in liquidity trap territory.

Jim Hamilton also seems to think there is a limit to what the Fed can do.  I really respect Jim Hamilton's views because he focuses squarely on the facts and it is impossible for me to tell whether he leans left or right politically--two things I like a lot in economists.