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Central Missouri | The fed can set short term rates at zero for as long as they want but 2, 5, 10, 30 year rates are set by the market. QE has kept these rates relatively low and basically how this works is the treasury issues the bonds at the auctions. They are bought by banksters. Those binds that the banks can't get rid of (i.e. pawn off on their customers) the fed buys thus effectively keeping the longer end of the curve down; but as the buyers wise-up to this and inflation heats up the buyers slowly stop buying because they have realized the scam and because the return they are gettin won't cover the interest rate risk in this money printing environment; but the real reason is that money investing chases the area of highest return with the least risk. U.S. debt instruments are increasingly low return high risk so money is moving into other things such as ausie debt, gold, silver. commodities.
Edited by ehoff 4/8/2011 08:56
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Just now from From National Inflation Association.
