So the person who sold those bonds after buying them from the government gets that money - in effect the government gets that money. In a puritan world sure, but if you expect the Fed will buy the bonds you can just buy them from the government and then sell to the Fed. And because there were negative interest rates for a time, that is exactly what happened as any other reason would be irrational.

So it's not a closed loop - it's just printing with more steps.

Likewise now its destruction with the removal of these reserves.