...So conservatively speaking, the Federal Reserve will directly finance no less than 60.51% of the U.S. Federal government’s deficit for fiscal year 2011. That figure might be as high as 67.09%, depending on the size of QE-lite.
These are the official numbers—as promised, none of these are dodgy numbers from the disreputable sources ax-grinders like to use. These numbers are straight from the horse’s mouth: The White House, and the Federal Reserve...
...With a single market participant buying up at minimum 60% of new issuance, the conclusion is obvious: The Treasury bond market is Bernanke’s bitch. His pimp hand is all over that ho’—and she be doin’ whatever Benny the Pimp wants her to do, as often as he wants her to do it.
Therefore, since Treasury bond yields during FY 2011 will be whatever the Fed wants them to be, they are no longer a reliable indicator of anything.
Quite the contrary, the bond markets will mask problems of the underlying economy until they are insurmountable.
This shouldn’t be a controversial observation: A single market participant that is purchasing 60% or more of a market owns that market. So anything that that market ordinarily signaled—be it risk, instability, whatever—is now no longer the case. The only thing that market will reflect is whatever fixed idea the Market Pimp will want it to reflect.
Therefore, since any problem that the Treasury bond market might ordinarily reflect will be masked until the very last minute, watching that market for signs of the health of the wider economy will only distract from what is actually happening in the wider economy.
Succinct Conclusion
The Treasury bond market is like a concrete highway over a sinkhole: You won’t realize anything is amiss, until the road suddenly disappears.
Read more:
http://gonzalolira.blogspot.com/2011/01/is-federal-reserve-really-purchasing.html
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