I had read about Fed purchasing Treasuries through the primary dealers; today I thought I should try and find the Fed's balance sheet.
And this is what I see:
Millions of dollars
Week ended Feb 24, 2010
U.S. Treasury securities $776,557
Recently, there were reports of Japan becoming the largest holder of US treasuries by surpassing China. Later, this story became mysterious because those reports did not account for Chinese entities holding treasuries through overseas locations. Now, this link clarifies the issue by saying that China is still, by far, the largest holder of Treasuries.
But, if Japan is at $768 B, does that mean that the Federal Reserve is the second largest holder of US Treasuries?
This would be rather amusing, as it implies a monetization of debt that, well, makes sense because it fits in well with quantitative easing. It also means that inflation should start kicking in soon through the expanded money supply mentioned in my earlier post.