As the market enjoys (and we use the term loosely) this brief lapse back into deflation, which given the economic contraction, so long anticipated at least by Zero Hedge, has finally materialized and put the ball straight back into Bernanke's monetary policy court, here is a brief reminder of reality: i) total debt subject to the ceiling increased by $2 billion overnight to $14,282,174, less than $12 billion away from a breach, and ii) more importantly, total securities held by the Fed increased by $27.3 billion in the past week to $2.5 trillion, an all time record. And yes, i) and ii) go hand in hand. Especially once the $2 trillion debt ceiling hike is announced.

Breaking point coming:

And the Fed:

Oh yes, and let's not forget this one:

Luckily, today, May 5, we discovered a new and yet undisclosed way to not have to worry about the $15 trillion in Treasury debt to be issued over the next decade, and the tens of trillions in debt that have to be rolled globally, so there is on longer a need to worry that the Fed will need to monetize anything ever again, and inflate its way out of a toxic debt spiral.

In other words, Bernanke now welcomes deflation with open arms. Or not.

Alternatively, as we have also been suggesting since January, 2011 is nothing but a mirror image (not enantiomeric, but superimposed) of 2010, and the very same H2 response by the Fed that we saw last year upon the onset of August 2010 economic doldrums, will occur yet again...

We leave the answer to our readers.