OilFinder2 wrote:I actually agree Operation Twist was a stupid idea. Don't think it'll do much, if any, good. A flatter yield curve will support the dollar, but that's about it. Maybe the FOMC was seeing inflation get a bit too high for comfort and decided to support the dollar without actually raising interest rates. The downside, of course, is that the stock market usually doesn't like a rising dollar.
Can't prove this, but I also wonder if they decided to support the dollar to send the Euro down, which would provide a bit of help to the European situation. If the Euro tanks that'll make the PIIGS debt burdens a bit easier to bear, and will help the export-led economy of Germany, who seems to be the main country propping up the rest of the Eurozone.
Though even if all this is true, there's no way anyone on the Fed would admit it. Could be a sort-of silent agenda.
My guess is that Operation Twister is primarily a thinly veiled means of monetizing $400 billion worth of US debt ... so that Obama's accumulated debt load won't appear so hideous. But who knows ... the Fed is the most opaque entity in existence (as far as their true motivations).
But Heli-Ben will be revisiting the QE3 invitation many more times over the next year. And eventually he'll cave.