Incidentally, this also means that the common claim that QE is a giveaway to bankers is the opposite of the truth; to the extent that journalists with close ties to bankers spread this story, it’s Orwellian. Remember, the Fed isn’t lending money at low interest to banks — banks, with their $2.5 trillion (!) of excess reserves, are lending vast sums at low interest to the Fed.Why would "journalists with close ties to bankers" spread the story that QE is a giveaway to bankers?
Krugman has this completely backwards.
"Journalists with close ties to bankers" spread the opposite, that QE was necessary to save the financial system.
But, it is a giveaway. Krugman is just looking at one sliver of a much wider story. The full story is that banks received money from the Fed for junk mortgage security paper and other paper that was often worth close to nothing and then deposited the proceeds with the Fed where they earn, without risk (and capital charges), a rate far higher than the Fed funds rate.
If I was a bank, I would do that trade every day, which is exactly what Lloyd Blankfein and Jamie Dimon did.