by Jerome Corsi, World Net Daily, 1/15/2010

Statistics from the federal government document how the Federal Reserve over the course of 2009 bought some 80 percent of the $1.5 trillion borrowed by the U.S. Treasury – making the federal government like the family that uses Visa to pay down a monthly MasterCard bill.Remarkable as that may seem, data make clear the Obama administration has been managing trillion dollar federal budget deficits by selling financial instruments to the Fed.

Even to sophisticated investment analysts, using the Fed to buy Treasury debt is the equivalent of simply printing money to pay for government-funded programs an increasingly bankrupt United States can no longer afford.

While the Federal Reserve’s massive purchases of Treasury bonds and government agency debt, including debt issued by the government-sponsored mortgage giants Fannie Mae and Freddie Mac, has keep interest rates low, the Federal Reserve Open Market Committee in its Dec. 15-16, 2009, meeting strongly suggested the program to buy debt issued by U.S. Treasury, government-sponsored agency debt and mortgage-backed securities will come to a close at some point.

Read more at http://www.wnd.com/index.php?fa=PAGE.view&pageId=121993

The Fed is monetizing the debt, i.e. printing money out of thin air to buy treasury bonds, “supporting” the bond market. This is NOT healthy.

“How will Obama continue to sell trillions of dollars of debt?”

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