As you can see from the following chart, the Fed owns 30% of all Treasury Bonds (federal government debt), and the percentage of T-bonds held by the Fed has been steadily increasing since QE1. (Because the term "QE" has developed such a negative connotation and the general public now understands that the term is just a fancy way of saying "money printing", the Fed now calls QE "LSAP" and "MEP". Don't worry what the acronyms stand for; the former is just another fancy way of saying money printing, and the latter is a fancy way of saying the maintenance of the printing program.) As this chart clearly demonstrates, the Fed has been enabling profligate Keynesian spending throughout this economic depression. As with all parabolic trends, this trend is unsustainable. However, keep in mind that China is buying less of our debt and Japan, which is devaluing its currency,
won't be able to continue to make up the difference. Therefore, unless Uncle Sam significantly cuts spending (which he won't), the Fed will have to purchase an even larger percentage of his debt, even though the Fed
wants to cease its "easing programs". So what will happen if the Fed monetizes even more debt, even if it doesn't want to? High inflation.
