Timber, "When the US government issues bonds to fund expenditure...

Timber,
"When the US government issues bonds to fund expenditure the government spending adds money to the banking system"
Incorrect. Those funds are applied to the economy, outside the banking system, to pay for infrastructure, defence, education, government employees (and Medicare nowerdays), to name a few. That figure is getting larger to the tune of $500 bill to $1 trill a year. The banks actually see very little of that, until it gets recycled back via salaries etc, but certainly doesn't pay for it.
Granted, the issuance of bonds for the bank BANK BAILOUT was a nil sum gain, but the taxpayer has ended up with paper in companies that are unlikely to return full value to them, EVER.

"and the sale of bonds subtracts money from the banking system" . Again, incorrect. A large amount of the money the government has raised from the issuance of bonds has come from overseas. Those funds actually ADD to the banking system, if anything.

in a nutshell, re QE, the government is borrowing extreme amounts of money from overseas through the issuance of new bonds, to buy back it's own old bonds, held mostly by the US banks, who then reinvest the funds in the equity market.
re the US govt deficit funding, it's a simple case of throwing more money at an economy that can't sustain itself. Again, they are selling bonds to overseas govts such as China, who need to buy them in order to continue to fuel rampant US consumerism for their own export led purposes

I'm not trying to contradict your well thought out (and extremely eloquent) explanation for the apparent lack of inflation in the US economy, but simply correct you on a couple of glaring mistakes, which weaken your arguments somewhat.q

no apology necessary......