Yesterday's overwhelming response to the 2 Year T-Note Auction

www.mikenormaneconomics.org posted a link for the CNBC post below.  Reason being because Mike called it exactly like this. Late last year as the Fed began handing the bail-outs to the banks he told us (blog readers) to watch for increased demand for treasuries. He also said it would be the financial institutions at the forefront of these rallies and why -
"The money to by government securities comes from governement spending.  Where else would it come from?" 
One very important thing to note as you watch this:  Rick Santelli thinks that because the banks are buying the securities they will have less money to lend but THIS IS NOT TRUE!  Bail out money was given to the banks in order to meet reserve requirements.









Banks are NEVER lending constrained EVER.  Ask any one whose ever worked in a loan funding department and they'll tell you that a loan creates a new deposit that comes from directly from the Federal Reserve not from the holder of the note.