This issue seems to come up a lot. For example, Timothy Taylor writes,
Of course, lower interest rates help borrowers pay less, while those who are receiving interest payments get less. Thus, the big winner from ultra-low interest rates is the U.S. government, which over the 2007-2012 period could owe $900 billion less in interest payments. Indeed, the McKinsey report also notes that central banks like the Federal Reserve have been buying assets as part of the “quantitative easing” policies in recent years, and funds earned by the Fed over and above operating expenses go to the U.S. Treasury. They estimate that the quantitative easing policies gained the U.S. government another $145 billion or so during this time period. So overall, the ultra-low interest rate policies have been worth about $1 trillion to the U.S. government.
At this point, I think I prefer to think in terms of consolidating the government balance sheet. The Treasury issues long-term debt, and the Fed buys some of this long-term debt with short-term instruments (such as interest-bearing reserves). You could get the same result without QE–just have the Treasury not issue long-term debt and issue short-term debt instead (or even buy back some of its outstanding long-term debt while issuing more short-term debt).
From that perspective, what QE does is change the mix of outstanding government debt so that more of the debt is short-term and less of the debt is long-term. I do not see that as taking money away from savers and giving a profit to the Treasury. To a first approximation, it is simply a fair swap of equal-value assets.
Suppose that expected returns are equalized across maturity structures. In that case, over the next 20 years, the government’s interest costs will be the same regardless of whether it issues a 20-year bond or instead issues one-month bills and rolls them over for 240 months.
Any saver who thinks that the short-term rate is being held down artificially is welcome to buy long-term bonds instead. You will find some right-wingers outraged over what the Fed is doing to savers. I have no plans to join that chorus.
“Savings” are presumably the small surpluses generated by individual activities which are generally held for purposes of deferred consumption. Objectives and anticipated circumstances for the consumption deferred may require accretions to the original amounts set aside for the deferred consumption.
It is the possibility (generally a probability) that the requirements for accretions are affected by policies such as QE and fiscal dysentery which impact the value of “money” (however represented) by debasement, inflation, taxation, credit destruction and disruption as well as the restrictions resulting from regulatory processes. So, “theft” may be the wrong designation.
Examination and investigation may reveal that the continuing impact of QE and those other factors (because of the requirements they create) is to cause the continuing and intensifying aggregation of small surpluses and diverging them into investment, rather than deferred consumption; the latter to be exercised at some discretionary point.
As a result, the provisions for liquidity (durable transferability) of investment assets that have absorbed small surpluses have become increasingly important to the exercise of those discretionary points of deferred consumption. If QE does constrain that liquidity, then it may be deemed to “steal” some of the value of small surpluses.