Well the govt may or may not do this. http://www.bloomberg.com/apps/news?pid=20601087&sid=ad0zneiPUVjA&refer=home But Bill Gross thinks this is the next tool available to the fed. Sure he maybe talking up his book. The govt may have to do this. So if the govt buys the bad Mtg backed bonds, turns around and issues Treasury notes to cover the purchase. Surely central banks around the world will demand a higher interest rate for this risk. Hence rates will rise ! Question 1) Does this mean the hammer and sickle will end up on the USA flag ? 2) How can interest rates stay down if this is done ? 3) The treasury market is a huge bubble and does not reflect current inflationary pressures, how much longer can it last ?