Yeah, it is interesting. My inclination is that you will see Bernanke buying as much as necessary out along the curve, because that's what he said he'd do, in his Helicopter Speech.
Denninger is suggesting he'll chicken out and take a Depression. However, that would go against every fibre of his being, given that he considers himself a Great Depression specialist and that he has always believed that we can readily avoid another one, using the great levers of monetary and fiscal policy. It's only a question, he has said, of going in early and hard enough - don't lose your nerve.
I am getting the feeling that the Chinese are just about ready to go AWOL from a few treasury auctions, just to let the Americans know that they are serious. If that's the case, and if they choose to do it at a five year or longer auction, the Fed is going to have to take out a big portion of the offering. If, having made that warning, the US doesn't get it and keeps on spending and monetizing, that's the point at which the Chinese and others will actively start exiting. That brings about Denninger's worry about Argentina (and, also what Sinclair fears). Hyperinflation is a currency event.
So, I'll be watching the 5 year and 7 year auctions this week with great interest.
