It is simple math, as Bernanke's Quantitative easing to infinity continues, you will see the contraction in spreads quarterly till infinity, when will it end, when the gov. says enough is enough. The FED's have their own self interest, they don't like REIT's because they let all the income flow to investors and it is taxed only once at the personal level, they know this is a loophole. If they make those 16-20% yields go down, you will shift to utilities or regular corporations where profits are taxed twice and more.
Self interest at work and they don't want it growing. Whats worse, is so many people hold these high yield REIT's in their Roth IRA's and money is accumulating untaxed at an exponential rate. Yes, the evidence is clear, M-REIT's are Kryptonite to the Federal Governments tax receipts. I saw this coming months and years ago. I remember the M-REIT's in Miami, Fla, from the early 1970's almost all tank to single digits from the 20-30's when the FED's compressed the yield spread to get the economy moving. 1972 I was in Atico Mortgage Investors and Associated Mortage Investors, both yielding 10-11%, it was a horrific ending by 1976, these guys were vapor.
I don't think the Fed cares about tax revenues. It's not their job to care about that. However, keeping interest rates low keeps the servicing of the national debt low and that they probably care about. After all, that is why they lowered rates in the first place, so people can borrow money and pay very little interest when they do. The fact that the government can do it as well was not unnoticed by the Fed I am sure. I don't think that whether money gets doubled taxed or not figures into any decisions they make. They look at things from a higher level than that and this double taxation issue is a second order effect. There are always second order effects and if you base your decision on them then you will find enough reasons to do nothing such that nothing will ever get done. Everyone realizes this except for the worry wart who never makes a decision for fear of the second order effects.