Any interest rate above the lowest non-inflationary rate is effectively a subsidy of savers by borrowers. If QE, standing alone, fails to stimulate, or even suppresses activity, as has been persuasively suggested, it’s because fiscal policy has not stepped up to replace the subsidy that was implicit in the previous rates.

QE must be a strategy adopted jointly by the fiscal and monetary authorities. The monetary authority must take the lead, making available as much money as the economy can use without causing inflation. But the fiscal authorities must support this policy by subsidizing savers, so that the lower rates do not suppress demand.

The government can subsidize savers without subsidizing saving per se. For example, if the government provided cheap insurance against something people save for, people wouldn’t have to save for it. That’s a subsidy for savers. What if Social Security benefits doubled at age 85? Remove the longevity risk, and the amount of private savings needed for a comfortable retirement falls faster than the return on Treasury securities.

Much of our economic policy comes down to disguising taxes and subsidies. As the saying goes, don’t take you, don’t tax me, tax the fellow behind that tree. Take, for example the problem of covering pre-existing conditions under Obamacare. The individual mandate was rightly sustained by SCOTUS as a tax because it funded the underlying provision that socialized the risk of getting sick. Obamacare funded the socialized risk by forcing everyone to buy insurance. But not everyone paid the same amount; there were subsidies for the poor. How is that any difference from the government subsidizing the insurers directly and then taxing everybody on a progressive schedule, with a credit for people who buy insurance on their own? It isn’t. But one sounds like preventing anti-selection and the other sounds like a tax. Call it the art of the possible.

Saving is a desirable practice for the citizenry, so much so that we are prepared to argue over whether a public policy decision “punishes” savers. But in the Platonic world of forms, any public policy that favors an activity is a subsidy, and any cost imposed on account of that subsidy is a tax. QE is both a tax reduction for borrowers and a subsidy reduction for savers. Whether those reductions need to be offset by fiscal action is for the fiscal authorities to decide, but there is no reason that the central bank and political branches cannot come to a public meeting of the minds on the matter. Well, no good reason, anyway.