Ice

What the Fed's Announcement Means for Gold

[quote]Buying up your own debt is no more useful than swapping one credit card for another. It is nothing close to sound finance. It is the last act of desperation when there is nothing else left to do.[quote]

agree

A bond is an IOU for a fix time period for which interest is being paid. A bond is a less liquid equity, at least compared to US dollar bill. A Dollar bill is an IOU - but it has an indefinite time period, no interest and is extreme liquid.

So the question is who is selling their treasuries to the FED and what are they going to do with the enhanced liquidity.
Here is my bet;
a. foreign holder will line up to sell to the FED
b. the liquid dollars will be exchanged for another currency.

If I am right then Wednesday we heard the FOMC announcing that the Chinese pressure had accumulated to the point that they need a sign of 'good will'. One phone call from China to Washington - get us out off some of these long term IOUs.

The Shedlock-Schiff Affair: A Chronicle

There are many other who were on the right track

Jeremy Grantham
John Mauldin
Steve Roach

Just to name three - In Mauldin's case he was on the subject at as early as Jan 2007.