[A]s soon as the Fed stops buying all the debt that we’re issuing—which they’ve been doing, the Fed’s buying like three-quarters of the debt that America issues. He said, once that’s over, he said we’re going to have a failed Treasury auction, interest rates are going to have to go up. We’re living in this borrowed fantasy world, where the government keeps on borrowing money.
As we can see in the red line (ratio of debt held by the Fed to total public debt) the most the Fed has ever held is a little more than 60%. This happen at one point back in the middle of 2011 following the announcement of operation twist (it was entirely expected). When Romney gave his talk, the Fed was only purchasing 20% of the government issued debt. As of today we can see the Fed is currently no longer purchasing government debt.
Again, the issue here is that there are a number of people who believe Romney when he states, "Fed’s buying like three-quarters of the debt that America issues," it is simply incorrect. He later predicts we would have a failed treasury auction once they stop by debt. Well, we are waiting.