This isn’t original, although I don’t know who deserves the credit.
So, here it is: in effect, QE2 amounts to a decision by the US government to shorten the maturity of its outstanding debt, paying off long-term bonds while borrowing short-term.
It’s just as if Treasury sold 3-month T-bills and used the proceeds to buy back 10-year bonds.
But why the Fed ? The Treasury is a huge player in the bond market. They are still selling long term bonds. Why ? What if the Treasury decided to finance the deficit with 1 and 3 month T-bills alone ?
No success link begging so far
update: Oh nooooo. Now Paul Krugman has found a link, but it isn’t to here on October 10 it is to EconoBrowser on October 3rd. “Missed it by that much” is a very week argument.