As Huszar notes, this hasn't worked and the banks aren't creating more loans. It brought down the cost for Wall Street to make loans but they have simply been pocketing the difference and using it to speculate, therefore raising prices and causing a new bubble. The Fed has admitted that the return on this massive $4 trillion dollar investment has been, at most, a few points of GDP growth and possibly even as little as $40 billion.
Because of this nonsense, the big US banks have seen their stock prices triple since March of 2009 and made them even more concentrated and risk-prone than before. 0.2% of the banks have been able to buy up smaller ones and now own 70% of US bank assets. In addition, it killed the urgency of dealing with the problematic US economy which is only producing low-wage jobs at home.
Simply handing out the cash in the form of infrastructure job programs would have been a much more logical solution. Inflation would have been a bit of a problem but it would certainly have beat this alternative. It's what FDR did during the Great Depression and it spread the wealth around enough to reboot the economy. Quantitative Easing has done the opposite and concentrated wealth so that income inequality hasn't been this bad since the end of the Roaring Twenties, right before the world fell into said Great Depression. One percent of the population owns 40% of the wealth while the bottom 80% get by with 7%. That means the richest 400 Americans have the same wealth as the bottom 150 million. That doesn't bode well for the future of the country.
It's also worth noting that that both Canada and the US have messed up central banking systems. The publicly-owned Bank of Canada was established in 1935 and allows the federal government to borrow money at almost no interest. This borrowing helped us escape the Great Depression and fund WWII. It also allowed for many amazing Canadian achievements without bankrupting the country. These include the Trans-Canada Highway, McDonald-Cartier freeway, St. Lawrence Seaway, various subway lines and airports as well as funding our universal healthcare system and Canadian Pension Plan.
In the 70's, high inflation was the result of the OPEC oil shocks and a tendency in governments to pursue full employment through monetary policy. Together, these would drastically raise the price of all goods and services. This situation would cause our various governments to follow the advice of the International Basel Committee, a think-tank composed of the central bank governors of the G10, and start borrowing almost exclusively from private sources. It was argued that this wouldn't cause further inflation since it is old money being recycled instead of new money being added.
However, this is debatable since now it is just the private banks creating money through fractional reserve lending. They don't lend out the principle which means they are just creating cash, and inflation, the same way the central bank would. Except we have to pay interest on it.
Canada now only uses its central bank for between 1% and 5% of its financing needs. This is a big problem as it puts the Canadian government in debt to private banks when there is no need to. This means we are all in debt to private banks since the Fed's debt is our debt. Between 1935 and 1974, there was almost no inflation except for during WWII. However, wars are always inflationary so this can be considered a blip.
The fact is that money lent by the Bank of Canada to the Canadian government would only be temporarily inflationary. The inflation would go away once the debt was repaid and the cash was removed from the money supply, same as when private bank loans are repaid. This means we could borrow to pay our bills without interest.
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