Bond vigilantes were all the rage in the 1980s and 1990s. The term, which was coined by economist Ed Yardeni in 1983, refers to bond traders who push interest rates higher in response to inflationary policy.

But now the vigilantes are gone, as the Federal Reserve’s massive bond buying through its quantitative easing (QE) campaigns overwhelms any potential action by vigilantes, says Bill Gross, co-chief investment officer of fund giant Pimco.

The latest round of QE (QE3) involves the Fed purchasing $85 billion of Treasurys and mortgage-backed securities monthly.

Editor's Note: Economist Warns: ‘Money From Heaven a Path to Hell.’ See Evidence.

"The vigilantes have been superseded by the Fed," Gross tells CNBC.

"The Fed buys, believe it or not, 80 percent of everything the Treasury issues right now. They're buying $1 trillion worth of bonds and mortgages a year. What can the vigilantes do relative to the Fed? There are hardly any bonds for the vigilantes to buy."

China and Japan are sucking up Treasurys too. China held $1.16 trillion of them as of Oct. 31, and Japan had $1.13 trillion.

As for QE3, some Fed officials seek to stop or slow the central bank’s purchases this year. And Philadelphia Fed President Charles Plosser and St. Louis Fed President James Bullard said last week that a drop in unemployment to 7 percent could bring an end to QE3, Bloomberg reports..

The jobless rate totaled 7.8 percent in December.

Editor's Note: Economist Warns: ‘Money From Heaven a Path to Hell.’ See Evidence.