Does the primary dealer have to buy the bonds at a pre-set par, and, if so, who sets the interest rate? And if the primary dealer is allowed to then short the bonds going into auction, that doesn't make sense to me; i.e., how can one short what one already owns (and, anyway, who would buy the shorts, given the massive amount of bonds coming into the market)? What would make sense to me is the primary dealer selling the bonds for the government at whatever price the market will bear, the dealer to get a commission for doing that. And if there's a shortage of buyers, the bonds would have to be sold at a relatively smaller percentage of the face value, thereby increasing the interest rate and attracting buyers. Hence, the bond market would simply crash. So, what's that got to do with the stock market or the commodities market? I would think that money would be sucked out of those markets only in the event that bonds are available for an attractive price; i.e., AFTER the bond market crash and a corresponding rise in stock and commodity prices.