Dave in Denver:
"How will the U.S. Government fund all of the additional budget deficit spending that has already been built into this year's spending plans if the Fed does not print money in some fashion in order to help finance all of the new Treasury debt issuance in 2012?
Before you answer this, you need to be aware, and you can use google to find the numerous sources of this data, from the time QE2 commenced until it ended the Fed directly or indirectly purchased over 100% of of all new Treasury debt issuance during that time period. In other words, it also paid for some of the refunding/rollover issuance...
"...I wanted to stop there today, but I came across this revealing blog piece from Felix Salmon. In terms of systemic liquidity and the question of whether or not the Fed will roll out QE3 (I think we all know the true answer to that), Salmon has a chart you have to look at which shows syndicated bank lending by quarter. Syndicated bank loans - which is the big corporate loan market - are starting to cliff dive. This means that corporations are not funding new projects AND that banks are not lending to new projects. To make this data even uglier, most of the syndicated lending that has occurred - 70% in fact - has been refinancing older, higher interest rate debt. Not only are the banks NOT providing liquidity to the corporate market, but only a small relative percentage of the lending is "new blood" lending." click through for the full blog entry from Dave.