According to a policy brief by Andrew Levin and Bill Nelson, QE4 will cost taxpayers nearly a $1T over the next decade.
Before you say don't listen to this stupid random crazy redditor with too much 'ism, Andrew Levin is a professor of monetary economics at Dartmouth with numerous prior roles at the Fed board. Bill Nelson is a professor at Georgetown and chief economist of the Bank Policy Institute, with an expertise in bank liquidity.
The ample-reserves regime (floor system of managing interbank lending) of blasting banks with excess reserves seemingly worked fine during ZIRP. However, the expense to service all this excess liquidity is turning out to be incredibly costly.
Where comes cost this, much wow, such big? In order to service the massive liquidity created by QE4, the Fed can only control interest rates with a “floor system” of providing extremely generous payments to banks via reserves (IORB = interest on reserve balances) and the RRP facility aka reverse repos. It is essentially a bribe to keep the federal funds rate from free-falling back to 0 or potentially even negative.
The result? Fed will operate at a loss for the first time in history and by suspending payments to the treasury, it will cost taxpayers nearly $1T over the next decade. “Money printing” with QE involves buying bonds that eventually mature and sucks money back from circulation. In some sense it is a loose metaphor. Currently, the Fed is actually printing dollars out of thin air with no oversight.
All of this done with zero warning of the magnitude of risks and zero approval by Congress. The beautiful part? This doesn't even include the extra cost to taxpayers of higher rates being required to tame inflation and thereby increasing borrowing costs that are being artificially propped up. The Fed is not alone in this reckless irresponsibility. This is happening to every major CB across the world.
https://www.mercatus.org/research/policy-briefs/federal-reserves-balance-sheet-costs-taxpayers
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