Last month, at the Federal Reserve's Jackson Hole conference, Federal Reserve chairman Ben Bernanke told the audience:

"The stagnation of the labor market is a grave concern not only because of the enormous suffering and waste of human talent it entails, but also because persistently high levels of unemployment will wreak structural damage on our economy that could last for many years."

This week, Bernanke assumed the obligation of those words as the Fed announced Thursday that it will engage in another round of quantitative easing – the so-called QE3 – through open-ended purchases of $40bn of mortgage debt per month. Furthermore, the Federal Open Market Committee (FOMC) declared its intent to hold the federal funds rate – the interest rate that the Fed directly controls – near zero "at least through mid-2015".

The FOMC went on to say that "a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens." This was as bold a statement for loose monetary policy to support the economy as anyone could have hoped for.

Before last week, Fed watchers had predicted that Bernanke would wait until December or early 2013 to launch a new round. Some had charged that to act earlier placed the Fed's reputation at risk, appearing as if it had intervened in a partisan fashion to help a struggling incumbent president during the last two months of a brutal presidential campaign. And, indeed, stocks soared after the Fed's announcement.

Yet, last week's jobs numbers were so awful – far fewer jobs created than expected in August, with many more people dropping out of the labor force, and the lowest labor force participation rate in 30 years – that Bernanke was forced to act regardless of purported appearances. More significant is the fact that in Thursday's bold move of open-ended asset purchases and a firm commitment to loose monetary policy until the economy is clearly self-sustaining, Bernanke has finally acted to satisfy his critics who have complained for over a year that he has allowed himself to be bullied into inaction by withering criticism from Republicans.

The open secret of the present, post-crisis monetary state of affairs is that QE3 will have very little direct effect on the economy, just as the previous rounds of quantitative easing had very little direct effect. While the Fed needs to ensure that longer-term borrowing costs for households and businesses stay low, its billions of dollars of monetary intervention is too small to directly affect debt markets that are trillions upon trillions of dollars deep.

Out of tangible ammunition, all that Bernanke has left in his arsenal is his ability to manage expectations about the future. Specifically, what Bernanke must do is convince the markets that monetary policy will stay loose indefinitely into the future: that instead of obsessing about inflation, the Fed will act to rein in monetary policy only once employment has made a substantial recovery. And that also means a much more doveish attitude toward future inflation.

While inflation is now exceptionally low (1.7% from June 2011 to June 2012, according to government statistics), indefinitely loose monetary policy means accepting a somewhat higher future rate of inflation – say around 4% – until it's clear that the economy has achieved a self-sustaining recovery. But before the harrumphing starts, note that the inflation rate late in President Reagan's term was 4%. As Bernanke understands from his own research as a professor at Princeton, a moderate amount of inflation will help the economy by inducing companies flush with cash to invest and by reducing the depressive effect of high levels of existing household debt.

And that's enough to get Bernanke – a mild-mannered academic economist and a registered Republican – labeled a traitor by the right. The bullying has taken many forms – calls for an audit of the Fed, threats of "ugly treatment", a plank in the Republican party platform for a study on a return to the gold standard, and Romney's vow to replace Bernanke if elected.

Mind you, those words were in response to Bernanke's actions to pull the economy out of the death spiral caused by Wall Street's collapse in 2008 and 2009. Also mind you that the right's persistent howls that rampant inflation is just around the corner have been thoroughly disproved. In fact, inflation has been persistently undershot the Fed's own target of around 2%. Still, one can only imagine the teeth-gnashing and frothing at the mouth from conservatives and libertarians that will greet Thursday's announcements.

It's hard to know if the Republicans simply want to destroy the economy in order to deny Obama re-election, or if they really believe that Bernanke is corrupting the soul of America. In the end, it doesn't really matter. It's what Ben Bernanke does that matters.

Contrast this act of lashing himself to the mast to the hesitant and diffident statements made by the Fed chairman earlier this year, in which he admitted that the economy was doing poorly but wouldn't commit to doing anything about it. And compare earlier statements of angst over tarnishing the Fed's "hard-won inflation credibility" to the more recent statement of concern about the fate of America's unemployed. Back then, it was clear that Bernanke, the clear-minded professor who knew what needed to be done, had been sidelined by Bernanke, the brow-beaten and bullied. Not any longer.

I suspect that the right's unyielding and vitriolic nihilism towards the economy has been an education for Professor Bernanke. From Thursday's actions, we can only infer that it has finally freed Chairman Bernanke to do the right thing.