Federal Reserve's Operation Twist Will Harm, Not Help, US Economy

The Federal Reserve's Operation Twist will not help the US economy, and will, in fact, cause harm to the economy.

Operation Twist is a Centrally Planned Idea

Operation Twist is an idiotic name given to an idiotic idea by a group of idiotic people who are centrally planning US economic growth. The Federal Reserve gave the name Operation Twist to its plan to sell its short term government bond holdings, and use the proceeds from those sales to purchase long term government bonds.

The Federal Reserve hopes that by buying longer term government bonds, it can push long term interest rates down. Operation Twist would be a brilliant idea if high interest rates were the problem in the US economy today. But, as I have explained many times since 2009, the problem in the US economy today is that interest rates are too low.

When interest rates are too low, the money supply cannot grow of its own accord. Without money supply growth, money will remain too valuable for people to spend and borrow it at necessary levels to create real, meaningful economic growth.

By trying to lower interest rates further, the Federal Reserve is actually going to make money even more valuable, which will cause people to spend and borrow money at even lower levels. Operation Twist is counter-productive to what is wrong with the US economy today. (I don't believe Operation Twist will do that much harm, but it will do zero good.)

Ben Bernanke is a Central Planner

I recently wrote an article explaining what's wrong with Federal Reserve Chairman Ben Bernanke. Bernanke is a prime example of why civilizations implode from within. Because he has successfully navigated his way through the higher learning institutions civilizations set up, people give him credibility he has never earned in the real world.

Ben Bernanke is a perfect central planer. Clueless beyond anything imaginable in the real world, but believing he actually knows what he is doing. Bernanke has led the Federal Reserve to lower interest rates beyond anything that would ever have occurred in a free market economy. By doing so, Bernanke has centrally planned the US economy into its present state.

Operation Twist is one more centrally planned economic program that will be counter-productive for the US economy. The old Soviet Union Politburo would have loved and fully endorsed Operation Twist.