The Fed is only buying the debt, not monetizing it

"There many myths about Fed policy over the past few years, but the biggest one has to be that the Fed has been monetizing the national debt. This simply is not true, but it does not stop some folks from making this claim. ... how can they can say this with historically-low U.S. treasury yields and muted inflation expectations? Surely, if the Fed were truly monetizing the debt we would be seeing a 1970s-repeat in the bond market, but we are not."
--http://macromarketmusings.blogspot.com/2012/11/the-biggest-myth-about-fed.html

Response (not mine):

"K. So over the past week, the Fed closed on $60 billion in MBS purchases from the Primary Dealers. At the same time, the Treasury floated $45 billion in unscheduled Cash Management Bills, for which the Primary Dealers were almost the exclusive buyers.

Each month the Treasury floats about $70-80 billion in net new debt. Each month the Fed closes on the purchases of about $70-80 billion of MBS from the Primary Dealers, who then use that cash to fulfill their obligation to purchase the new Treasury debt.

But the Fed isn't monetizing the debt. No sirree Bob. No it's not. Why not? Because you said so. And you're an economics professor. That's why.

Lee Adler
The Wall Street Examiner
http://wallstreetexaminer.com"

So the Treasury sells debt to the Primary Dealers.  And the Primary Dealers, after a short delay, sell it to the Fed.  But it's not monetization until Simon says it is.