What incremental capital pool is going to purchase treasuries?

In normalized times (ex-quantitative easing) demand for treasuries comes from 1) shift in investment allocation from other assets 2) new domestic savings allocated to securities markets 3) foreign investment driven by trade deficits.

Arguably, a healthy treasury market would grow at the same rate as the 2nd and 3rd sources of demand.  In such a market, supply and demand would grow in tandem and there wouldn't be an imbalance of one or the other--this would generally suggest price stability.  However, in 2009 and 2010, personal and foreign savings didn't keep pace with new treasury supply.  YTD in 2011 they have kept pace, but in all three years supply/demand balance has mostly been a result of new money coming into the treasury market courtesy of the Fed.  Without the Fed as a buyer, the treasury market will have to rely on the organic sources of demand.  As a result there could be a supply/demand imbalance on the horizon.