What will the FED do?

A lot of people watch the Ten Year Treasury Note yield as a measure of inflation/deflation. When plotted on a weekly basis, this graph tells us that the FED is still keeping the lid on the yield by buying it with printed money. OK, in reality, digitized money.

In reality, TNX is not a measure of inflation (either monetary or price), but investers' view of the state of the economy. Treasuries are believed to be a safe way to store money, since the govt guarantees it. It earns little and even with a moderate inflation, the yield is negative.

The FED and the Obama regime have painted themselves into a corner. Newly printed money accumulates in the banks as reserves, on which the FED pays interest. So, the money injected into the system remains not only unproductive, but is a drag. In addition, the Obama regime is busy trying to kill American assets in coal, oil and natural gas. No wonder that 41% in WV voted for a Texas inmate in the primary running against O'Bungle. And these were Democrats.

Meanwhile, the FED may have to to some serious interference, if it wants to avoid a collapse. What could these be? Well, the FED could buy into Exchange Traded Funds (ETFs) to prop up the Stock Market and bonds. The Bank of Japan is doing just that.