All government programs have unintended consequences. Usually, that unexpected impact does not undo the orginal intent of the legislation. Hopefully, that will be the case for the plan to "monetize" long term treasuries.
The decision to purchase $300 billion in long dated treasuries carries this risk. How? First, the plan lowers interest rates. The US has a lot of debt to sell (far beyond the $300 billion). Lower rates make the instruments less attractive to buyers. Second, existing debt holders may sell into the "backstop" bid thereby sopping up the cash infusion....China comes to mind. Third, this plan undermines the confidence in the future value of our currency. You have probably noticed that China and Russia have proposed a new reserve currency to replace the dollar.
Much of US foreign military and economic policy rests on the reserve currency status of the US dollar. The effect of this debt purchase policy on our country could be profound. Ruinous deficit spending has been allowed to become a routine part of fiscal policy. Adoption of the Hedge Tax would begin to undo this malfeasance.
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