In a post titled "The Fed Buys Last Week's Treasury Notes," Chris Martenson has done some fabulous investigative reporting.
By tracking CUSIP numbers, he shows that demand at the recent Treasury auctions has been much weaker than advertised. In fact,
What does this mean?[I]t turns out that 47% (!) of the bonds that were taken by the primary dealers in that auction have been quietly bought by the Fed and permanently secreted to its balance sheet.
True to its secretive nature, the Fed has chosen to engage in these purchases in a highly-opaque fashion.This immediate repurchase of newly auction bonds by the Fed tells us that demand for these bonds is not nearly as high as advertised, and that things are not quite as strong as represented.
A more honest and open approach would have been for the Fed to simply buy them outright at the auction but this way, using "primary dealers" and "POMOs" and all these other extra steps the basic fact that the Fed is openly monetizing US government debt is effectively hidden from a not-too-terribly inquisitive US press and public.