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Operation Twist Continues Through 2012

June 21, 2012 by  

Operation Twist Continues Through 2012

In an attempt to spur job creation, the Fed will continue “Operation Twist” through the end of 2012. The program is designed to lower long-term interest rates without shoveling more money into the economy.

The plight of many Americans has struggled to improve since the initiation of “Operation Twist” last October. The move was intended to produce lower yields on long-term bonds while keeping short-term rates close to the same. The Fed is now planning to sell bonds with maturities of three years or less and buy securities with maturities of six years or more. Essentially, the Fed is shifting its portfolio.

The Fed hopes that lower interest rates will prompt more borrowing and spending.

But some have questioned the effectiveness of the plan, noting that interest rates are already at record lows and growth seems nonexistent. Despite low interest rates, the demand for loans has not increased, and banks are still hesitant to give loans. Rather than speeding up, job creation is slowing. Reports from the month of May revealed abysmal figures.

Of the 12 voting members of the Fed, only one opposed the plan.

The Fed has said that interest rates should remain “exceptionally low” through 2014.

Bryan Nash

Staff writer Bryan Nash has devoted much of his life to searching for the truth behind the lies that the masses never question. He is currently pursuing a Master's of Divinity and is the author of The Messiah's Misfits, Things Unseen and The Backpack Guide to Surviving the University. He has also been a regular contributor to the magazine Biblical Insights.

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  • pj

    Insanity: doing the same thing over and over again and expecting different results.
    Albert Einstein

    • Ted Crawford

      Hopefully, pj, most of us will have this very thought in mind on November 6 !

    • GALT

      ” To conquer, first DIVIDE!”

      Unfortunately, the study of “economics” has no connection to “reality”, so the specific system is irrelevant, and the one being claimed as the solution, is in fact the most responsible for the “problem”……….but this requires that one actually has a fundamental understanding of the “history” and it is clear that very few here have this understanding or are capable of considering the possibility that it is their very ignorance which allows this
      idiocy to continue. In short, you are being played……by those who are benefiting from the continuation of this “fraud” on every level…….and since it is quite clear that you have very little in common with any of these people who show up every day ( except sunday ) to jerk your chain…….the fact that you are unquestioning participants in your own victimization is particularly ironic………..but such is the way of things for the w.i. A.L.F.

      You may alter this lack of understanding at any time……..

      The Social Conquest of Earth
      Debt: The First 5000 Years.
      Power Inc.
      Extreme Money
      The Great Divergence
      Economic’s Unmasked

      Just as you resist the implications of the simple question Where are the common law and equity courts?, as it applies to The Constitution…….

      That there is NO NOBEL PRIZE for “economics” and therfore there are no Nobel Lauriets on this subject…….should also stimulate anyone intelligent into the mode of further inquiry……….after all, why would these supposed ‘prize winners” actually allow this misconception to continue……….

      This is similar to the question on the Constitution and the silence of Ron Paul and Judge Napolitano to address what is in fact the most direct way to restore what has been lost, and it is impossible for any Judge not to know this, so again we have a case of direct FRAUD……..which continues without missing a beat……..

      So I guess if is your belief that it is my fault for raising the questions, and this seems to be the general reaction, you might want to consider that any claim you have to being capable of intelligent reasoning……..lacks any evidence to support it……….

      • RichE

        GALT,
        What’s w.i. A.L.F.

      • GALT

        The opposite of a i.e.P.L.F………..you do not have to be i.e. to be a P.L.F., but you definitely have to be w.i. to be an A.L.F………………these are the only two possible classifications for homo sapiens………..and sadly most are A.L.F.

        Sorry Rich E. but that is all I can give you at this time…….”intellectual property” and all
        that, being an issue here………all will be revealed in time.

      • GALT

        I’m sorry that would be e.i. P.L.F…….not that you couldn’t start with the i. but then you would have to do…….i.t.t.e. P.L.F.

      • phideaux

        “Sorry Rich E. but that is all I can give you at this time…….”intellectual property” and all
        that, being an issue here………all will be revealed in time.”

        In other words galt does not have a clue as to what he is talking about but rather is just making it up as he goes along.

      • GALT

        yuh think? and if true, how could you possibly know, what you were talking about?

      • http://gravatar.com/bychoosing Jay

        Galt, and his impeccable impersonation of an empty chamber…

  • JDN

    I think its too late to change directions in our economy , no matter what they do from here its going to be one heck of a crash .

  • Ted Crawford

    Well, while this isn’t the QE 3 I expected, it isn’t January 20, 2013 yet either!

  • RichE

    Mr. Nash,
    The goal of ‘Operation Twist’ is to stimulate the housing market by lowering long-term rates. House loans are generally long term and use long term rates. Business loans are generally short term and use short term rates.

    The Fed Rate is the cost of transferring money from your bank account to my bank account and vice versa. Raising the Fed Rate makes it more expensive for you and I to do business thus slowing down the economy. Lowering the Fed Rate makes it cheaper thus speeding-up (stimulating) the economy, but all of this is dependent on RISK. Regardless of the rate (Fed, long-term, short-term) what is the risk? Are you and I willing to take the risk of doing business?

    The Fed can’t change risk, only make the risk cheaper or more expensive. None of these actions will directly generate jobs. Only business can supply jobs from consumer demand.
    Things will change when business is willing to take on more risk. Things will change when the consumer is willing to take on more risk. Every time you acquire something you take on more risk, even if it’s a pet rock.

    • phideaux

      “The goal of ‘Operation Twist’ is to stimulate the housing market by lowering long-term rates. House loans are generally long term and use long term rates. Business loans are generally short term and use short term rates.

      Re-read the article RichE. It explicetly states the fed is getting out of long term and going into short term.

      “The Fed is now planning to sell bonds with maturities of three years or less and buy securities with maturities of six years or more. Essentially, the Fed is shifting its portfolio.”

      • RichE

        phideaux,
        Buying long-term bonds will lower the long-term bond rate. A Bond’s Price:Yield(rate) relationship is inverse.

  • Nancy in Nebraska

    I know that I don’t come close to understanding everything that they’re doing to manipulate the economy. But I do know that it isn’t going to benefit you or I. The blood suckers just want to get out every penny that they can. The bankers can borrow money at 0% interest and then loan it back to the government for a payout! Why don’t we just save time and give the bankers our money? That’s all it is anyway. Then the bankers can keep investing in derivatives (interest rate swaps). It helps to prop up the dollar and gives them more time to bleed us dry. When it all comes crashing down (again) we can bail them out. More tax payer money directly to the banks. The banks derivatives trading caused the near collapse in 2008. They currently have more money invested in derivatives than they did in 2008. I do know that our economy is set to collapse. It is coming. Nothing can stop it, it has gone too far. There isn’t enough money in the world to fix it. I believe that the blood suckers have done this on purpose. They walk away with all the money (converted to true wealth). And we end up with NOTHING! We then become their slaves. We will have to do whatever they want since we will depend on them for everything. They have put laws into place that will allow them ALL power over us. They get ALL the money and ALL the power! They will be able to get people to do things they would never do otherwise. Its coming! Get ready for it!

    • RichE

      I wish I could give you hope. Maybe a walk through the valley.

    • GALT

      Actually, it is not a problem at all………the debt is meaningless, so the only thing that does matter is your ability to act in accordance with your moral upbringing and do not believe the worst in people……..at least let them live down to your expectations, first…….

      If you are not living in a state of constant fear at the moment, there is no reason to anticipate that such will be the case, just because the “perceptions” have changed…….
      your neighborhood is still your neighborhood……..and what you need today will not change……..so unlike markets……which are always irrational……….people can usually be relied on to stay reasonably calm…….provided the damn has not burst in the immediate vicinity……….and what happens to the perception of the world economy only matters to the idiots that are causing the problem…….and have the money……for the rest of us, stuff is pretty basic…..and this will not change…….

      Cooler heads are needed……remain calm……it is only the wealthy who believe they possess wealth……who will be the losers……sucks living in that 42nd floor penthouse, when the elevators don’t work……..and now all you can do with those toys, that also don’t work……is look at them……….

      • phideaux

        TWO HUNDRED words or there abouts and absolutely nothing of consequence said.

      • GALT

        Don’t panic, reading comprehension may come in time………and if you ever need a reference for a job as an approximate counter, don’t hesitate to ask.

    • RichE

      Nancy,
      The early Christians were worried the end was near. Read what they did.

      • http://gravatar.com/bychoosing Jay

        Not worried, expectant…

        • RichE

          Jay,
          Expectant or worried read what happened.

  • Robert Rashbrooke

    Although I mentioned it in another post on a different matter, the articles by Howard Freeman are pertinent to this one too. They explain why we have the Federal Reserve not being a Government Department (as is the case in most other countries) and why Congress is so beholden to it and so reluctant to change the status quo.

    Unfortunately, I can see no way that we can sever this arrangement and get this country back on to a sound financial footing, what with the Law and the Supreme Court being part and parcel of the arrangement, despite the Court being the final arbiter of the peoples justice!.

    Our chances of changing the course of the slow but inevitable destruction of this country are really mimimal, no matter which party/president is in power, but nonetheless I still look forward to reading the posts on the subjects raised in this column. I do accept that at the time of reading the post my view may not be swayed, but in the light of future experience, it may well turn out that that then current opinion of mine was incorrect and needed revision. It has happened before and no doubt will happen again.

  • Middlemant@2012

    I’ll agree with your comment Robert R.This Nation is on a down hill slide,and has passed the point of no return(The Book:”After Shock”)AS this nation loses more jobs,and high inflation sets in,things are going to get NASTY!!!God help us All!!!!

  • gangbuster@2012

    Until you resreach these problems facing our nation,reading books and articles by people that know what the hell their talking about,I would take what any one else says on this web-site very ligthly (Unless they can back it up with actual quotes)

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