It is not the "Bond Bubble" it is the term mismatch

Referring to this post at Pragmatic Capitalism.  The author points out that Treasury auctions are simply accounting tools that allow the Fed to smooth out the term structure between Treasury short term money  and long term bonds. The Fed,  not the Treasury, is doing the Operation Twist.  He is correct as far as he takes it and this works when we are close to equilibrium and the terms along the yield can move independently.

But,but... here is the problem.  The term structure for the actual delivery of government goods can mis-match the Fed's version of the yield curve.  At the end of the day, government uses much of the same 'real goods' delivery network as the private sector and we get something called crowding out.  We get a sudden mismatch between the private sector term structure and the treasury term structure.  The Bond market can no longer reconcile the two, so some inventories have to be devalued.

Rather than monitor an interest rate, monitor the yield curve, make sure the terms  move independently and that tells you we have no crowding out.

For example, look at this post from Macro and Other market Musings. David Beckworth notes the recent drop in NGDP. We saw that NGDP drop in the yield curve, which flattened and shrunk. Prior to the drop, the curve was steep, there were bottlenecks. The stimulus filled the pipeline, but could not make delivery.