Not my favorite way to start the day on a Saturday!

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http://www.bloomberg.com/apps/news?p...PoA&refer=home

Fed May Purchase Treasuries in Days to Ease Credit, UBS Says

By Whitney Kisling
Jan. 16 (Bloomberg) -- The Federal Reserve may purchase Treasuries within the next few days or weeks as it broadens its policy beyond interest rate cuts to ease credit conditions amid the worst recession in 25 years, according to UBS AG.
“Fed officials use every chance they get to highlight Treasury purchases as an important arrow in their quiver,” William O’Donnell, U.S. government bond strategist at UBS Securities LLC in Stamford, Connecticut, wrote in a research report today. “It now appears as if the Fed may use Treasury purchases as a blunt tool to bring loan rates down further. This makes it more likely that Treasury purchases come sooner.”


Fed Chairman Ben S. Bernanke reiterated Jan. 13 that he’s considering buying long-term Treasuries as a way to bring down borrowing rates and unfreeze private credit markets as U.S. economic data and government reports continue to show the recession is deepening.


The economy weakened in all regions during the past month, the Fed said the following day, as access to credit remains locked, forcing consumers to cut back on spending.


Lower rates could “spill over into private borrowing rates much more broadly,” Federal Reserve Bank of San Francisco President Janet Yellen said yesterday in a speech. UBS said Yellen’s comments refer to more than mortgage rates, which the Fed already started trying to lower this month by buying $500 billion of mortgage-backed securities.


‘Denominator Effects’
“By buying back Treasury debt, all loan markets should benefit via ‘denominator effects’ by further lowering base rates,” said O’Donnell of UBS, one of the 17 primary dealers that trade directly with the Fed.


Treasury purchases may help to keep yields low as President-elect Barack Obama aims to roll out an $825 billion stimulus plan that will be funded with government debt.


Yields on 10-year notes rose 7 basis points to 2.27 percent at 12:19 p.m. in New York. The yield dropped last month to the lowest level on record when investors sought government debt as a haven amid the collapse of global credit markets.


To contact the reporter on this story: Whitney Kisling in New York at wkisling@bloomberg.net

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One has to really question whether or not this is in actuality Monetizing the debt?

"The Federal Reserve becomes the Buyer and Seller of US Gov't debt, there is no 'Market" in which to sell the debt as it's too risky. The Fed makes all it can buy and The Fed buys all it makes, and it's a real whirlpool once this track has been decided upon. This only serves to make Finance Market problems for the US Dollar exponentially WORSE, it is only a time-staving move for an inevitable US Dollar collapse. The "repugnance" of US Debt feeds on itself, NOBODY wants to hold onto US debt since it's likely to lose value at any rate, at any time. There is no more consistency to assess risk on. US debt will not be sellable to anyone BUT The Federal Reserve. It becomes in essence, worthless."