If Foreign Demand Keeps Falling, Will Fed Start Buying US Treasuries Again?

This is what kept Fed officials awake at night in 2008 and it could easily happen again.

(From Zerohedge)

Overall, another concerning auction, one where the fading in foreign demand continued to be offset by Direct bidders, although the question is what happens if and when Direct buyers join Indirects in boycotting US auctions, leaving only Dealers, who already have near record high holdings of US paper, to fund Uncle Sam. When that happens, look for a quick and painful market crash as the Fed will be desperate for cover to start another round of deficit monetization, also known as QE.

Click here for the article.