Guest Post: There Will Never Be A Failed US Treasury Auction... Until There Is

"And there's your trade. Everyone is betting on this one idea - that the Fed will never lose control of interest rates and the US Treasury will never have a failed auction. The same way nearly every major financial player on the planet was willing to bet that US real estate could never fall for an extended period of time.

And we all know how that trade worked out.

Timing, please?

Of course, the big question for most Zero Hege readers is not if this will happen, but when.

Who knows? Not me. Not Paul McCulley. Not the Bernank. Not Timmy G. Not any financial pundit or TBTF economist. No one knows..."

at http://www.zerohedge.com/news/guest-post-there-will-never-be-failed-us-treasury-auction-until-there

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Demand for U.S. Debt Is Not Limitless: In 2011, the Fed purchased a stunning 61% of Treasury issuance. That can't last.

"The conventional wisdom that nearly infinite demand exists for U.S. Treasury debt is flawed and especially dangerous at a time of record U.S. sovereign debt issuance.
The recently released Federal Reserve Flow of Funds report for all of 2011 reveals that Federal Reserve purchases of Treasury debt mask reduced demand for U.S. sovereign obligations. Last year the Fed purchased a stunning 61% of the total net Treasury issuance, up from negligible amounts prior to the 2008 financial crisis. This not only creates the false appearance of limitless demand for U.S. debt but also blunts any sense of urgency to reduce ..."

at http://online.wsj.com/article/SB10001424052702304450004577279754275393064.html?KEYWORDS=us%20debt%20federal%20reserve

James Grant Says Bond Market Is "Bubble of Modern Banking, a Desert of Value; Gold a Reciprocal Faith in Bernanke"; Time for an "Office of Unintended Consequences?"

"...Grant: The price of gold is the reciprocal of the world's faith in the deeds and words of the likes of Ben Bernanke. The world over, central banks are printing money as it has never been printed before. The European Central Bank has increased the size of its balance sheet at the annual rate of 89%. It's amazing. The Fed is far behind at only 15%. The Bank of England 67% over the past few months. These are rates of increases in the production of paper currencies we have never seen in the modern age. It takes no effort at all. They simply tap the computer screen..."

at http://globaleconomicanalysis.blogspot.com/2012/03/james-grant-says-bond-market-is-bubble.html