What about the cash that was used by the holder to pay for the bond in the first place? And when the Fed buys that bond, it isn't retired. The government (really the taxpayer) still has to pay it off.
With deficit spending, I think that you know the answer to that. The trick is to keep putting off the day of reckoning. Kinda like consumers do when they rollover their credit card balances on to a different card.
Richard W.