James Bianco plays straight-man to Charles Biderman in this extended (and admittedly audio-challenged) discussion of the reality behind money printing, inflation, and the US Treasury market. Following our discussion of the deficit earlier, it seemed appropriate to listen to this back-and-forth as Bianco addresses who is really buying US Treasuries, how 'money' is created by the Fed for the banks, and where inflation is leaking into the system. "The day the Fed admits there is an inflation problem is the day they are too late" is how they summarize the temporary/transitory verbiage that the Fed needs to keep using to placate the masses. Gold (and TIPS) remain their preferred strategy as Bianco argues that putting the 'inflation' threat in context is critical - this is not about 14/15% comparisons, this is about investor expectation that we get 3% inflation with the Fed at ZIRP and intending to keep printing money - which is just as toxic. The two end with an interesting conversation on the simultaneous debt deflation and price inflation and the importance of not comparing either to their extremes by way of shrugging off concerns.