Market monetarists don't believe in speculation or credit issues. It is all about the money supply. But you have show throwing money is not so productive unless you have unlimited money to throw.

Bonds are in massive demand both in good and bad times as collateral these days, Chris. I am sure you know this but your readers could benefit: www.talkmarkets.com/.../fed-weakness-future-insatiable-bond-demand-with-short-supply

But what if you are weak minded and think of things like the Stay Puft Marshmallow Man?

The Federal Reserve needs to campaign for the government to raise social security benefits. Somebody has to start spending around here.

Maybe the Chinese consumer was thinking that job security is not permanent. So he hoarded money.

One would think that Japanese long bonds would have demand as collateral for swaps. Is that the case?

I am not a fan of Scott Sumner often, but when I am, it is when he says raising interest rates is actually loosening policy. And of course, he is right about that, except for the Fed increasing IOR when they do it! Stay thirsty my friends.

One more point, banks would lend more if interest rates were higher. That is counterintuitive but true. So, low interest rates give banks the desire to collect IOR instead of lending into the real world. Small business suffers under this scenario.

And it is so much easier for an investor to speculate on a house rather than to build a business. And policy doesn't favor small business, driver of growth, anyway.

Sounds like another hidden demand shock to me, Mish.