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The US Federal Reserve wound up its $600-billion "QE2" program to boost the ailing economy with easy liquidity on Thursday, having generated more controversy than jobs and growth.
Without fanfare the US central bank's New York branch paid banks $4.9 billion for US Treasury bonds in the program's last step Thursday morning, as economists and bankers continued to argue its effect.
Critics of the Fed's second "quantitative easing" program -- hence QE2 -- say it fueled surging food and fuel prices, pumped up asset bubbles in emerging economies like China and Brazil, and devalued the dollar.
Even sympathizers say it didn't have much impact, noting that US employment remains stubbornly high at 9.1 percent and growth remains depressed.
James Bullard, the head of the Federal Reserve's St. Louis branch, acknowledged in a speech Thursday that economists and policymakers were "fragmented" over the Fed's program, launched last November.
But, he insisted, "QE2 worked in reality."
The Fed at the time had already reduced interest rates to near zero and the economy, growing sluggishly, was at risk of plunging into a disinflationary spiral like that that sank the Japanese economy in the 1990s.
"These developments left the US at risk of a Japanese-style outcome," he said.
Now, with that threat past, "QE2 has shown that the Fed can conduct an effective monetary stabilization policy even when policy rates are near zero."
But many reject that stance.
"QE2 was a terrible mistake, and I think it has been counterproductive for economic growth," said John Ryding, chief economist of RDQ Economics.
"It has gotten inflation up, and that has squeezed the people most in need of paying off their debts."
The idea behind QE2 was that the Fed would pump a vast amount of money into the economy by buying Treasuries from banks, giving them more cash to lend and pushing down long-term interest rates.
Without fanfare the US central bank's New York branch paid banks $4.9 billion for US Treasury bonds in the program's last step Thursday morning, as economists and bankers continued to argue its effect.
Critics of the Fed's second "quantitative easing" program -- hence QE2 -- say it fueled surging food and fuel prices, pumped up asset bubbles in emerging economies like China and Brazil, and devalued the dollar.
Even sympathizers say it didn't have much impact, noting that US employment remains stubbornly high at 9.1 percent and growth remains depressed.
James Bullard, the head of the Federal Reserve's St. Louis branch, acknowledged in a speech Thursday that economists and policymakers were "fragmented" over the Fed's program, launched last November.
But, he insisted, "QE2 worked in reality."
The Fed at the time had already reduced interest rates to near zero and the economy, growing sluggishly, was at risk of plunging into a disinflationary spiral like that that sank the Japanese economy in the 1990s.
"These developments left the US at risk of a Japanese-style outcome," he said.
Now, with that threat past, "QE2 has shown that the Fed can conduct an effective monetary stabilization policy even when policy rates are near zero."
But many reject that stance.
"QE2 was a terrible mistake, and I think it has been counterproductive for economic growth," said John Ryding, chief economist of RDQ Economics.
"It has gotten inflation up, and that has squeezed the people most in need of paying off their debts."
The idea behind QE2 was that the Fed would pump a vast amount of money into the economy by buying Treasuries from banks, giving them more cash to lend and pushing down long-term interest rates.