How the Fed is trying to rebrand "QE"

The concept of "quantitative easing" (QE) is increasingly entering the public lexicon.  Unfortunately, there really seems to be alot of confusion about what QE actually is - and this rather funny video reflects that:

Let's be clear that the Bank of Canada has not engaged in QE so a Canadian discussion about the concept is somewhat irrelevant. But I think what really scares people most about "quantitative easing" is that it raises fears that the Fed is somehow overstepping its traditional boundaries and racking up colossal amounts of debt. I supose that faced with this growing backlash, Ben Bernanke and Co. are now trying to "rebrand" QE in order to dim the spotlight away from it (kind of like the public relations measures Maple Leaf Foods used with the tainted meat scandal a few years ago). Effectively, Ben is trying to remind the public that QE, despite its cryptic name, is nothing more than the purchase of securities like long term bonds with newly created money to keep interest rates low and supportive to the economic recovery - something that has always been a tool of central banks. Of course, as the chart below shows, the magnitude of QE today is huge with the Fed's balance sheet expected to peak at a whopping $3 trillion by 2011!! For context, prior to the financial crisis, the Fed's balance sheet was a slim $800 billion:

The most significant downside risk of such a hefty balance sheet, and what should concern people the most about it, is that the excessive liquidity it creates in the banking system could fuel uncomfortably high inflation at some point in the future when the economy is near full capacity again. Of course, an inflation problem in the US a number of years from now should be a much smaller concern than the risk of the world's largest economy slipping back into recession at present, which would have immediate repurcussions for other countries, especially Canada. So worrying about inflation is kind of like worrying about cancer just after you've gone through open heart surgery!  Perhaps if the Fed's "rebranding" campaign attempted to telegraph this message a little better, it might also make QE just a bit more palatable.