What happens when the yield curve begins it's move upward! ! !

The Fed not only has pressure due to the low and slow GDP growth, the high level of unemployment and the high level of unused liquidity in the system but they also have the gargantun task of keeping rates low so that our government's debt load cost (interest expense on our borrowed money that is now over $14T) doesn't skyrocket...and totally 'bust the bank' as they say.....
So, my prognostication is that we will continue to hear that there is NO inflationary pressure - how long the markets buy that will be interesting to see....increasing price pressures for the things of daily living are hitting consumers from all sides (except housing) and that is inflationary. And with commodity bubbles forming all over the 'spill-over' effect will continue to add price pressures to the system.
prb

Never Has U.S. Borrowed So Much for So Little: Chart of the Day (attached)

By Brendan Moynihan - Jan 27, 2011 The U.S. government has been borrowing record amounts of money, though with little effect on interest rates. That may be about to change, according to Nouriel Roubini, the New York University economist who predicted the 2008 financial crisis.

“The fiscal problem is very serious,” Roubini said in a Bloomberg Television interview yesterday with Tom Keene from the World Economic Forum in Davos, Switzerland. “The bond vigilantes have not yet woken up in the U.S. in the way they have in the euro zone. Unless the U.S. addresses this fiscal problem, we’re going to see a train wreck.”

The CHART OF THE DAY shows total U.S. public debt outstanding soaring to record highs and approaching its $14.3 trillion ceiling, while interest rates and debt-service costs as a percent of gross domestic product fall to record lows. The average maturity of U.S. marketable debt outstanding is five years.

Treasury Secretary Timothy F. Geithner said Jan. 6 that lawmakers must raise the federal borrowing ceiling in the first quarter or risk a default on U.S. debt and a loss of access to credit markets. Geithner said it will reach that level between March 31 and May 15.

Economist Ed Yardeni coined the term “bond vigilantes” in 1983 for investors who protest inflationary monetary or fiscal policies by selling bonds and driving up government borrowing costs.

To contact the reporters on this story: Brendan Moynihan in Chicago, Illinois,
at bloomberg.net