Thought this was interesting.. explains what the Fed has been doing with Quantitative Easing 1 & 2 which thus far has added over $1 Trillion to national debt and how the American people have gotten no benefit from this expenditure...
"Determined to rescue the country's largest banks from their subprime lending and derivative investing blunders, the Federal Reserve in effect swapped more than $1 trillion in newly created cash for the low-quality loans and debt securities that commercial banks wanted badly to be rid of.
For the banks, the swap was like waking up on Christmas morning and finding that Santa had taken out the trash and left a big sack of money in its place. But the exchange gave the Fed a new problem – how to keep all the new cash that banks were sitting on from fueling a doubling in the public's money supply and the unprecedented rates of price inflation that such a doubling would cause. The solution was to give commercial banks an incentive to keep sitting on the excess reserves rather than lending or investing them. The incentive the Fed offered was to pay interest on the reserve that commercial banks keep on deposit at Federal Reserve banks, so that the money would stay there.
The Federal Reserve is now paying interest on nearly $1 trillion in deposited reserves. The interest rate is only 0.25% per year, but with open market interest rates so low, it's more than banks can earn elsewhere, so it's enough to keep the excess reserves sequestered. And at that low interest rate, the expense is easy for the Fed to manage, only about $2.5 billion per year."