A Fed-Induced Liquidity Trap (or is it a vacuum?)?

The United States gubmnt has massively increased its indebtedness, and apparently the Fed has bought most of this debt. Why hasn't this monetization of the debt led to expectations (in the markets) of increased inflation rates a year or two from now?

Here's one possible explanation, but I'm open to others. Since I'm an old-skool monetarist, I'm still thinking in terms of the relationship between the money supply and prices: MV=PQ, but it looks as if I'm out of synch with the financial markets. How is all this monetization of debt not leading to inflation and inflationary expectations?

My possible explanation:

1. The gubmnt spends trillions.
2. The gubmnt has to borrow for that spending.
3. If they borrow from the non-bank public, there's no change in Ms or reserves: what's borrowed from the public is taken out of circulation but is put right back in when it is spent.
4. If they borrow from the Fed, the spending increase leads to an increase in Ms because an equal amt isn't removed from the Ms.
5. Ordinarily (well, historically, anyway), when the gubmnt borrowed from the Fed, all the gubmnt spending led to massive increases in Ms because the spending led to increased reserves and a multiple expansion of deposits (see 1976-82).
6. Now, however, since the Fed pays interest to commercial banks on their deposits at the Fed (their reserves), the banks don't create more money based on the gubmnt spending and their increased reserves. There is no multiple expansion of deposits. The Fed, by paying interest on commercial banks' reserves, has created a new type of liquidity trap. 
7. Conclusion: even though the gubmnt borrows from the Fed, the phenomenal increase in gubmnt spending doesn't set off a multiple expansion of deposits; hence there's only a small increase in the Ms, and, therefore, no inflationary expectations.
8. Implications and questions:

• If/when interest rates rise (as they will if inflation expectations increase), commercial banks will stop stockpiling reserves and start lending (i.e. creating money) at a rapid clip.... unless the Fed increases the interest rate it pays on reserves. There's a butt-load of potential liquidity sitting there in the form of reserves at the Fed.
• The major cost of the programmes, given this liquidity trap, is not so much inflation or inflationary expectations, but rather distortions and the deadweight losses from gubmnt intervention in the economy.