In most of the public statements by Fed officials I have seen recently, there is little talk that is not leaning towards some type of second-round quantitative easing program (i.e. "QE2"). However, no one in power is saying much about how large these upcoming purchases of (presumably) long-term Treasury securities by the Fed will be.
Of course, you can find plenty of speculation outside the Federal Reserve System about he size of QE2. The New York Times editorial page writers think that the purchase should be at least $1.7 trillion. These people survey some economists, who think the intervention will be in the range of $500 billion to $1.25 trillion. This guy, who's including the asset purchases required to replace the mortgage-backed securities which he is assuming run off at a faster rate, says $3 trillion.
Maybe these people are just blowing hot air, but maybe they know something I don't, in which case this seems quite disturbing. Suppose I do the following mindless calculation. Assume the Fed wants 2% inflation per year, which requires an increase of maybe one percentage point in the inflation rate. The monetary base in the US is currently $1.96 trillion, so suppose therefore that I want this to increase by 1%, or 19.6 billion over the next year, which if this translates directly into inflation, gives me the extra 1% I want. This implies that QE2 could involve something like a purchase of $19.6 billion in long Treasuries over a year, or about $1.6 billion per month. What are these people thinking?