The Fed and POMOs stealing from taxpayers?

Zero Hedge performing forensic accounting on the run.

Ben is running the QE money in a circle through the primary dealers. The Fed is doing this because the Fed wants to buy on the run with Treasury issuance, and disguise that fact from creditors; directly favor the term structure of Congress over the private economy. That effort forces the yield curve off equilibrium, and the resulting illiquidity is laundered by the primary dealers for about a 6% fee. But the advantage is that Congressional spending gets special treatment.

By dropping the POMO pretense, we save 6% and we can still print money for Congress. Just let the more liquid general treasury market be responsible for arbitrating Ben's bet. Ben's problem is that when we find out we are investing in Congress, we will more likely bet against him, and Ben won't be able to make the bet.