0

Economics · FIRE · Politics · Regulation

Bernanke Doubles Down on Policy He Personally Said Had Failed

This is rich. Federal Reserve Chairman Ben Bernanke this week announced Operation Twist, a program to pour hundreds of billions of dollars of Fed money into long-term debt to drive down long-term interest rates.

This would be the same Ben Bernanke who joined two other Fed economists to write a paper in 2004 that studied the original Operation Twist in the early 1960s and concluded it was a failure. Here’s the report (PDF).

Bernanke and the other authors concluded the first Operation Twist might not have been big enough. The one Bernanke announced this week is many times larger, both in nominal and inflation-adjusted terms, than the one he concluded had failed.

Should we fear this new and far larger Operation Twist will end up being a far larger failure than the first one? Here’s our news analysis with comments from some economists that make me fear the answer is yes.

Tags:

— Steve Stanek

Steve Stanek is a research fellow at The Heartland Institute and managing editor of two Heartland publications, Budget & Tax News and Finance, Insurance & Real Estate News. He has been writing and editing for Heartland since 2003. Stanek's work has appeared in numerous local, state and national publications including The Wall Street Journal, USA Today, Investor's Business Daily, Crain's Chicago Business, Chicago Sun-Times, The Hill, Boston Herald, New York Post, Pittsburgh Tribune-Review, and Washington Examiner, and he has appeared on radio and television programs including Chicago Public Television's Chicago Tonight and the CBS Evening News with Katie Couric.