A group that gets little attention is the trader’s from China and other Asia countries living both in LA and SF. Most own property here and in China and other spots around the globe, they are active at the high end golf clubs (played with many) an important source of economic wealth to the West Coast.
Many are returning home, selling or renting out homes.

With all due respect, textbook explanations are patently absurd.

“Private sector wealth is unchanged as a result of open-market purchases.”

False. Sellers no longer have a coupon payment, so the Fed pays a premium greater than remaining PV, incentivizing the seller to part with bonds in exchange for cash. Doing this in a noninflationary environment with short term securities, the premium is small. Sellers are happy to book a small profit. But attempting it in a crisis environment with longer term bonds and hyperinflation on the horizon, there is a possibility of panic selling and total collapse of the bond market. Impairment of Treasury’s ability to float more debt is right in front of our noses, whether the Fed prints more currency deposits or not.

“We have a careful separation of powers, asking the Fed to take responsibility for inflation and letting the Treasury worry about how to pay its bills.”

This is disingenuous at best. The bond market sets interest rates, not the FOMC. The only leverage the Fed had was to raise or lower bank reserve requirements — and they’ve been shovelling cash as fast as possible to shore up bank capital, accepting worthless paper as “collateral.” The Bernanke crew is in crisis mode and conspiring with Treasury to explain away the collapse of two primary dealers, insolvency of AIG and the GSEs, collapse of share prices, abrupt conversion of GS and MS to Federal banks, cessation of CP lending and global lockdown on commercial letters of credit. Both the Fed and Treasury were caught flat-footed after a full year of assuring everyone that “subprime” was contained.

“Historically there [is] really just one big story — the Fed created deposits primarily by buying Treasury securities, and these ultimately ended up as cash held by the public.”

Worse than wrong, it’s wrong twice. How was the Fed initially capitalized to start buying Treasury securities ?? and if greenbacks have any intrinsic value, are you saying that cash is backed by future tax revenue ?? Nothing could be farther from the truth. In the early 70s when I was at UW Madison, we were lectured by Fed officials that they had an M3 annual monetary expansion target of 3-5%, on the theory that cash in circulation (bank created and multiplied by lending) should mirror (or drive) 3-5% annual GDP growth — all of which was patently false. Treasury borrowing requirements drive Fed policy, the economy and private wealth be damned. We get paper IOUs backed by nothing but mounting deficits. Social Security and Medicare trust funds are nonexistent.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a2slI2R.mgNg&refer=home

Opening Bells ring, are you listening,
On the Street, the snow job is glistening
An ignoble sight,
We’re happy tonight,
Working in Wall Street bailout wonderland.

Gone away is the old bird,
Here to stay is a new bird
He sings an opprobrious song,
As we go along,
Working in Wall Street bailout wonderland.

We can go and eulogize a subprime snowman,
Then pretend that he is Madoff the clown
He’ll say: What’s my carry?
We’ll say: None man,
But you can always do a fleece job
In Ponzi town.

Later on, we’ll all conspire,
As we dream of not being fired
To face unafraid,
The new scams that we’ll make,
Working in Wall Street bailout wonderland.

In the meadow we can build another financial snowman,
And pretend that he’s an SEC circus clown
We’ll have lots of fun shtuping mister snowman,
Until the markets inevitably knock him down.

When it snows, ain’t it thrilling,
To aim the hose while pyramiding
We’ll frolic and play, the fraudulent way,
Working in Wall Street bailout wonderland.

Found in comments at:
http://blogs.wsj.com/deals/2008/12/18/some-credit-suisse-bankers-livid-over-new-bonus-plan/

See also: “Japan’s export crash is finally upon us, and this is the worst thing that could happen,” said Yoshiki Shinke, a senior economist at Dai-Ichi Life Research Institute in Tokyo. “The recession will be very severe as companies adjust investment, production and labor.”