The Fed is signaling in many ways that it plans to start a new program of printing more money soon (Quantitative Easing 3 although it should really be QE-4 because of Operation Twist). By using the new money to buy bonds, they will get the new money into government hands if they buy new bonds, or private hands if they buy existing bonds. The Fed already owns more US government debt (bought with newly printed money) than all the foreign owners like China and Japan combined. It’s so convenient for the government to be able to sell bonds to itself using money newly printed for the purpose.
In the article below, the new president of the San Francisco Fed, John Williams, says that a QE-3 should be open-ended, no target amount of money stated in advance. This would eliminate the now embarrassing QE 1-2-3 sequence and avoid the necessity of eventually having to announce QE–10, QE–100 and so on. There is little doubt that the Fed will eventually get to the equivalent of QE–10 if not higher.
John Williams is a PHd economist who has headed research at the S.F. Fed. His appointment continues the now well established trend of turning the nation’s money over to the care of academics with no experience outside the academy. Given his training, he knows perfectly well that there is no evidence any of the prior quantitative easings/money printing exercises have worked. If he were honest, he would also admit there is little reason to think they should work. This is all faith-based, and the advanced economic degree is just used to obscure that.