The midterm elections, as every pundit has told you, is about jobs. But whatever happens Tuesday, the results won't do much to reduce the unemployment rate. Congress is headed either for divided government or slim Democratic majorities - and either way, the era of big action is likely over.

But Wednesday, the Federal Reserve is expected to get back in the game by announcing at least a half-trillion in long-term bond purchases. Many observers have found this at least somewhat encouraging. It may not do too much, but with inflation so low, it can't hurt. Joseph Stiglitz, the Nobel prize-winning economist at Columbia, disagrees. He thinks it can hurt, and it also won't do very much. The proper role for the Fed, he argues, is backing up Congress: We should try fiscal policy first, and if that raises interest rates (which he doesn't believe is likely), then our monetary overlords can buy bonds to bring those rates back down. We spoke last week, and a lightly edited transcript follows.

Ezra Klein: You're skeptical of further action from the Federal Reserve. Why?

Joseph Stiglitz: The Fed, and the Fed's advocates, are falling into the same trap that led us into the crisis in the first place. Their view is that the major lever for economic policy is the interest rate and if we just get it right, we can steer this. That didn't work. It forgot about financial fragility and how the banking system operates. They're thinking the interest rate is a dial you can set and by setting that dial, you can regulate the economy. In fact, it operates primarily through the banking system, and the banking system is not functioning well. All the literature about how monetary policy operates in normal times is pretty irrelevant to this situation.

But didn't quantitative easing work in 2009?

But think of the various channels through which monetary policy will operate now. The one that traditionally is the focal point is investment. Remember that quantitative easing's effect on interest rates, after all, is only 0.2 or 0.3 percent. So broadly, there are two categories of firms right now: the large enterprises flush with cash - they've got about $2 trillion and a slight change in the investment rate won't change their investment policy. Then there are the small and medium-sized enterprises that are cash-starved. And here, the funds need to be channeled through the banking system, and that part of the banking system is still sick. So if normally it might have a small effect, now it'll have a smaller effect. So that channel is blocked.

Then there's a second channel, which is the mortgage market. Those interest rates will go a little lower. But again, it won't directly affect very much. We have too much capacity already. Those lower interest rates will move some money around, taking it from the elderly who hold long-term government debt and put it into the hands of people with mortgages. That's just redistribution.

Third, it will have a very small effect on equity prices. But that won't have much effect on either consumption or investment. People recognize that this is a temporary intervention and the government won't maintain it for long, so they won't run to spend that money. There might be some help on collateral prices, but that won't be much.

Then there's competitive devaluation, which is that lower interest rates could lead to a lower exchange rate. But for that to work, other countries need to allow it to work. And they're saying that they won't, that they'll get into currency wars with us, and that may be worse.

What about people who say that the right thing to do now is to put monetary and fiscal policy together, so the government spends and the Fed buys bonds to make sure the spending doesn't raise interest rates?

People who say that are living in a peculiar world. In normal times, people would worry about fiscal expansion driving up interest rates and government spending crowding out private spending. In those times, monetary policy could undo this crowding-out effect and increase the effectiveness of fiscal expansion. But all the evidence is that as government spending went up during the last two years, interest rates didn't go up, and are not likely to go up now. We are not in a crowding-out situation. You can't talk about crowding out with interest rates at 2 percent.