How Will Operation TWIST Screw the World?

Discussion in 'Financial Futures' started by bobbymak880, Sep 8, 2011.

  1. America tried precisely Operation Twist in 1961. To lower long-term rates the administration of John Kennedy persuaded the Federal Reserve to sell (shorter-term) bills and use the proceeds to purchase (longer-term) bonds. By altering the supply of different types of debt, the idea was to “twist” the yield curve.

    I don't like the sound of this.

    What are the ramifications of this new initiative?
  2. Banks are likely to get screwed...
  3. we'll screw ourselves by becoming too dependent on rolling over our debt at yields manipulated too low. our rollover risk is going to go through the roof- and when our day of reckoning comes watch our yield explode like greece- from 4% to 80% 2yr paper in less than 4 years... we'll make that look like a marathon, i can see it happening to us virtually overnight when our currency crisis hits.
  4. If you push out the duration of your liabilities, you lower your rollover risk.