“Operation Twist” Did Not Work—nor will it now
We heard two economists today, and saw a brief rally in the Treasury market, state that current Fed actions resemble the 1960s’ “Operation Twist” — designed then, as it is framed now, to bring down long-term interest rates.
What their youth did not know is that Operation Twist did not work — nor will it now, as gimmicks of this kind can only provide temporary relief. Operation Twist was followed by Nixon’s Wage and Price Controls, which also failed, and then by Ford’s “WIN” policy — an acronym for Whip Inflation Now.
We expect rates to work their way higher over the coming cycles, as will be explained in the coming Review, owing to the lack of population, immigration, and fertility growth, combined with an uncontrollable Federal deficit over which the Fed has very little control across several major contributing area
