Those darn markets have minds of their own. The Fed’s scheme to print cash and buy $600 billion in bonds aims to drive up the price of bonds and drive down yields (interest rates). Fewer bonds, higher prices, and lower yields. But the markets have rebelled, and investors have dumped bonds, thereby driving bond prices down and yields up — the exact opposite of what the Fed intended. Oops. This report explains:

Bucking the Federal Reserve’s efforts to push interest rates lower, investors are selling off U.S. government debt, driving rates in many cases to their highest levels in more than three months.

The Fed’s $600 billion program to buy Treasury bonds began late last week and is kicking into high gear this week, with the central bank buying up tens of billions of dollars of debt. …

The trend is a potential problem for the economy and the Fed. Rates had fallen sharply for months in anticipation of a Fed buying program, and in a short time much of that effect has been lost, spelling an unwelcome rise in borrowing costs throughout the economy.

That could throw a wrench in what the Fed is trying to accomplish: to use low rates to encourage more borrowing and risk-taking by consumers, businesses and investors, thereby reviving growth.

This may be a blip, or it may be a sign that investors are now wary of holding USD-denominated assets. After all, if the Fed is going to devalue the currency, why not get into other assets that will hold their value?

What this does show is that the Fed is playing with fire, trying a gambit with many unintended consequences. (“Still, the recent move in rates has been jarring, raising some market worries that the Fed’s program might be ineffective or backfiring. That could damage the Fed’s credibility and raise borrowing costs broadly.”) When the new Congress convenes, oversight hearings should explore whether Helicopter Ben’s plan has the potential to deliver more harm rather help — both to the economy and the Fed’s reputation.