"You will note that 3/4 of that sum comes from the bailouts of the government mortgage agencies. I am myself uncertain how to think about this problem. First, is it useful to think of the additional bailout expenditure as being monetized, if only indirectly through the mix of Fed/Treasury policy? If yes (debatable), and the monetization itself limits a harmful further deflation, can it be said that this monetization is not a transfer away from citizens in the usual sense that an inflation in Zimbabwe might be? But rather a net gain for citizens or at least a much smaller loss? Is the interest paid on those monetized reserves the actual cost?
In any case, where exactly does the “3.5% of gdp” loss “come from”?
I do not know!"