This is the next phase in the meltdown of the dollar and the collapse of the American economy,to prevent rates from rising and impacting the housing market further,the Fed must keep long term interest rates low.These auction failures are the market correcting the long term instabilities in the US economy,as the markets are now under complete government control,the Fed now has to become the buyer of last resort.Of course it is not buying them with real money,it is just - via the treasury- printing it.Faber,Schiff and the Pin have been predicting this for years.Now it is finally happening.
From Ixus:Britain trending towards hyperinflation(http://www.thepropertypin.com/viewtopic.php?f=19&t=16035&p=284086#p284086
Zerohedge gives an explanation of this article by Chris Martenson:
The Fed Buys Last Week's Treasury Notes
Denninger is on the case now:BLATANT Monetization Uncovered
FED issued $28 billion in 7 year bonds last week.
Primary dealers (operating for the FED) bought $10 billion of these.
5 days later, the FED repurchases 47% or $4.7 billion.
This is monetisation, or printing money out of nothing. It's a balance sheet operation that makes money out of thin air.
Another thing to look at is would the demand for bonds have been as strong if the FED didn't do this?
EDIT: The proof is in the CUSIPs on Martensons post. Same ID's.