QE2--What Are the Choices?

Ed Dolan has a very good post today where he succinctly lays out the two major alternatives open to the Fed if they do engage in additional quantitative easing. As he points out, the principal issue with the most aggressive strategy is whether the Fed has the ability to dial it back once further easing has had its desired effects. For my part, I'd go for the more aggressive approach, otherwise we risk the same response we had with the fiscal stimulus: "it doesn't work." Then we'd be living in a world where our only recourse would be austerity--the economic equivalent of the 18th century medical practice of bleeding.