Volker caused inflation. If you increase interest rates all you do is increase the amount the treasury must pay to the bankers. Since it is impossible to raise taxes with the moronic right, the only thing it will do is cause more inflation.
The problem with TBT is they wont raise interest rates. Thus, the t-bond may stay at 5% and inflation may be 15% even thogh the fed owns 100% of the bonds. The fed does not care becasue they make the money out of nothing. They get the interest payments.
Yes, and if they sell treasuries the Fed buys more from nothing and the current deflates. It becomes a vicious circle when the confidence of the currency comes into doubt....It continues until the stimulus is reigned by hiking interest rates.
There is nothing magical. I am just glad I dont own a house in areas like California or Nevada until at least 2012. This will take years to resolve.