Arpit Gupta responds to that J.P. Morgan report we discussed earlier this week:

This analysis narrowly focuses on the short-term impacts of easing against the broader impacts. In the short term, more easing (say, in the form of further quantitative easing) may well lower long-run interest rates (the liquidity effect). But in the long run, easing serves to increase total nominal spending, and so expectations of future inflation. This is the Fischer effect, and it works to raise long-run interest rates.
A lot of people seem to be upset right now that interest rates are low; but that’s notsolely a function of the Fed. The “natural” Wicksellian rate of interest is low due to a weak economy. Successfully targeting a future path of nominal spending higher than that expected today would lead to a robust economic recovery and higher inflation expectations — and so actually higher interest rates in the future. That’s why Milton Friedman identified low interest rates with tight, rather than loose, money.
So phrasing this issue as a “economic recovery on one hand, low rates on the other” dilemma is short-sighted. The path to both economic recovery and higher rates lies in more easing. And if you look internationally, the countries that have done the most to implement expansionary monetary policy have the higher interest rates.

Arpit’s argument, as I understand, is that rentiers are actually misunderstanding what is really in their own best interest, which suggests to me that Arpit should lead a “Rentier 2011″ bus tour across America’s most affluent precincts, during which he will give barnstorming public speeches on the value of unorthodox monetary policy interventions aimed at increasing the nominal spending level. I would happily donate some small sum to this effort. A bit more seriously, I would enjoy reading a proper debate between Arpit and a critic of QE and NGDP targeting.