.....the Swiss National Bank is sailing in uncharted monetary waters by choosing not to sterilise its CHF credit/money creation.

Of course the Swiss fiscal position is slightly different from that of the US.

With capital preservation becoming the top priority for banks, institutions were willing to pay more than the face value of Treasury securities, because investing elsewhere would come with too great a risk of default.

And, yes, the downward spiral really did begin with the trend towards a collateralised lending regime.

So is the SNB taking a risk? Yes. Arguably it is.

Is the Fed concerned about similar issues? Yes, possibly.

In which case traders should really re-evaluate how they interpret QE. After all, it's very possible the Fed decided not to implement more QE exactly because of fears that Treasuries were once again becoming Giffen goods.

Or as Falkenblog had it when that blog's author independently came to the same conclusion three days ago....a Geithner good

Today's Treasury move didn't work directly via the income effect, but indirectly via the income effect's effect on the substitution effect, so it's not a traditional Giffen good, rather, a 'Geithner good.'

It looks like the Fed is running out of options: the Treasury isn't, of course, but the US government is ideologically painted into a corner through a diametrically false assumption as to the nature of fiat money itself......

"The future is already here -- it's just not very evenly distributed" William Gibson